57th annual report 2009-10 · 2010. 7. 29. · your directors have pleasure in presenting the 57th...

Sundaram Finance Limited5 7 t h A n n u a l R e p o r t

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Annual Report2009-101

Board of Directors S Viji Chairman S Ram S Narayanan T R Seshadri S Ravindran S Prasad Aroon Raman Srinivas Acharya T T Srinivasaraghavan Managing Director

Audit Committee S Prasad Chairman S. Ravindran S Viji

Share Transfer & Investor Relations Committee S Prasad Chairman T T Srinivasaraghavan Srinivas Acharya

Asset Liability Management Committee T T Srinivasaraghavan Chairman Srinivas Acharya S Venkatesan A N Raju M Ramaswamy

Risk Management Committee T T Srinivasaraghavan Chairman Srinivas Acharya S Venkatesan A N Raju M Ramaswamy Harsha Viji

Compensation Committee S Ravindran Chairman Aroon Raman T T Srinivasaraghavan

CFO & Secretary S Venkatesan

Auditors M/s. Brahmayya & Co., Chartered Accountants 48, Masilamani Road, Balaji Nagar, Royapettah, Chennai 600 014

Information Security Assurance Services M/s. Tejas Brainware Systems (P) Ltd., ‘Lakshmi Bagh’, New No.28 Old No.19, Second Main Road C.I.T. Colony, Mylapore, Chennai 600 004

Registered Office 21, Patullos Road, Chennai - 600 002 Tel: 044 2852 1181, Fax: 044 2858 6641 Website : www.sundaramfinance.in

Sundaram Finance Limited

2

Senior Management S Venkatesan CFO & Secretary P S Raghavan Executive Director & Head – Sundaram Business Services A N Raju Executive Director Paramesh Krishnaier Executive Director K Swaminathan Executive Director (Sundaram Infotech Solutions) M Ramaswamy Executive Director & Head – Treasury

Harsha Viji Head – Strategy & Planning Malli J. Sivakumar Senior Vice President (Sundaram Infotech Solutions) V K Raman Senior Vice President (Sundaram Business Services) P Viswanathan Deputy Secretary & Compliance Officer

S Ravindran Vice President & Head – Northern Region S Srinivasan Vice President & Head – Leasing S Sivakumar Vice President (Operations) Shridhar Iyer Vice President M J Kulkarni Vice President & Head – Western Region

K Sankarakumar General Manager & Head – Distribution Rajesh Venkat General Manager & Head (Projects) V P R V P Varma General Manager & Head – Karnataka Region H Venkatesan General Manager (Audit) Balachander Gopinath General Manager & Head – Kerala Region S Krishnamurthy General Manager & Head – Tamil Nadu (South) C Balasubramanian General Manager & Head – Tamil Nadu (West) S Mahadevan General Manager & Head – Personnel and Administration G Vaikuntam General Manager & Head – Quality & Process Improvement

Subsidiaries Sundaram BNP Paribas Home Finance Limited Sundaram Finance Distribution Limited Sundaram BNP Paribas Asset Management Company Limited LGF Services Limited Sundaram BNP Paribas Trustee Company Limited Sundaram Infotech Solutions Limited Infreight Logistics Solutions Limited Sundaram Business Services Limited Sundaram BNP Paribas Fund Services Limited Professional Management Consultants Limited

Bankers State Bank of India United Bank of India State Bank of Travancore Syndicate Bank State Bank of Patiala HDFC Bank Ltd. State Bank of Hyderabad The Hongkong and Shanghai Banking Corporation Ltd. Bank of India Standard Chartered Bank IDBI Bank Ltd. Citibank N. A Indian Overseas Bank The Royal Bank of Scotland N.V Canara Bank Bank of America

Debenture Trustee IDBI Trusteeship Services Limited Asian Building, Ground Floor 17, R. Kamani Marg, Ballard Estate, Mumbai 400 001

CURRENCY EQUIVALENTS Rs. One Million = Rs. 10 Lakhs US$ 1 = Indian Rs.45.14* Rs. One Billion = Rs. 100 Crores or *RBI Reference Rate as on 31.03.2010 Rs. 10,000 Lakhs


Contents

Directors’ Report 4

Financial Highlights 14

Auditors’ Report 15

Balance Sheet 18

Profit and Loss Account 19

Schedules 20

Corporate Governance Report 57

Consolidated Financial Statements

Balance Sheet 68

Profit and Loss Account 69

Schedules 70

Auditors’ Report on Consolidated Financial Statements 87


4

FINANCIAL RESULTS:

(Rs. in Cr.)

Particulars Year ended Year ended

March 31, 2010 March 31, 2009

Income from Operations 1181.89 1082.78

Profit on Sale of Shares in WABCO-TVS (INDIA) Limited 25.39 –

Other Income 41.43 31.99

Total Income 1248.71 1114.77

Less: Total Expenditure 925.23 895.06

Profit before Tax 323.48 219.71

Profit after Tax 226.75 150.73

Surplus brought forward 41.96 47.14

Transfer from Special Reserve 76.00 _

Amount available for appropriation 344.71 197.87

Appropriations have been made as under:

Transfers to:

– Statutory Reserve 45.40 30.20

– Special Reserve _ 2.00

– General Reserve 175.00 82.72

Dividend – Interim 33.33 22.22

Final (Proposed) 22.22 13.89

Dividend Tax 7.74 4.87

Surplus carried to balance sheet 61.02 41.97

344.71 197.87

Directors’ Report

Your directors have pleasure in presenting the 57th Annual Report with audited accounts for the year ended 31st March 2010. The

summarised financial results of the Company are given hereunder:


DIVIDEND

Your Company paid a tax-free interim dividend of Rs.6/- per share

(60% on the face value of Rs.10/-). Your directors are now pleased

to recommend a final dividend of Rs.4/- per share (40% on the

face value of Rs.10/-). This, together with the interim dividend,

aggregates to a total dividend of Rs.10/- per share (100% on the

face value of Rs.10/-) for the financial year ended 31st March 2010,

on the paid-up capital of Rs.55.55 cr.

CORPORATE GOVERNANCE

• Adetailedreportoncorporategovernance togetherwitha

certificate from the Statutory Auditors, in compliance with

Clause 49 of the Listing Agreement, is attached as part of this

report.

• Compliancereports inrespectofall lawsapplicable to the

Company have been reviewed by the Board of Directors.

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

Uncertainty continues to cloud the shape and pace of global

economic recovery. Just as the US seemed to be emerging from its

worst recession since the Great Depression, Europe finds itself in

the midst of a major crisis. Private spending in advanced economies

continues to be constrained and inflation remains generally subdued,

making it likely, that fiscal and monetary stimuli in these economies

will continue for an extended period. Emerging market economies,

on the other hand, seem to be significantly ahead on the recovery

path, but some of them are also facing inflationary pressures. This

has prompted central banks in some of these countries to begin

phasing out their accommodative monetary policies.

INDIAN ECONOMY

The monetary policy response in India, in the wake of the global

economic crisis, was aimed at instilling confidence in market

participants, mitigating the adverse impact of the global financial

crisis on the economy and ensuring an early return to the path of

recovery. However, in view of the rising food inflation and the risk

of broader inflationary expectations, the Reserve Bank began the

process of exit from the expansionary monetary policy, beginning

October 2009. SLR and CRR were hiked by 100 basis points each,

between October 2009 and April 2010, while repo and reverse repo

rates were raised by 50 basis points each during the same period.

In India, the economic recovery, which began around the second

quarter of 2009-10, has since shown sustained improvement.

Industrial recovery has become more broad-based and is expected

to continue in the wake of rising domestic and external demand.

Reversing a nearly yearlong decline, exports and imports have both

grown since October/ November 2009. Flow of credit from both

bank and non-bank sources has picked up and overall business

sentiment has turned distinctively positive. India’s GDP growth in

* Profit on sale of shares

Profit (Rs. in Cr.)

400 –

350 –

300 –

250 –

200 –

150 –

100 –

50 –

0 –2008-09

333

368

213 227

2007-08 2009-10

PBDT PAT

257

151

77*

77*

99*

25*

25*

Dividend (Rs. in Cr.)

2008-092007-08

150% 65%*

36.11

2009-10

41.67

55.5560 –

50 –

40 –

30 –

20 –

10 –

0 –

100%*

* On the capital expanded by 1:1 bonus issue


6

2008-092007-08 2009-10

Hire Purchase and Hypothecation Loan Disbursements

(Rs. in Cr.)

6000 –

5000 –

4000 –

3000 –

2000 –

1000 –

0 –

5110

4540

5834

2009-10 has been estimated at 7.4%, driven by 9.3% growth in the

industrial sector and 8.5% in the services sector. The abundance

of liquidity in the system ensured that interest rates remained

reasonable for most part.

The developments on the inflation front are, however, far from

encouraging. The wholesale price index (WPI) inflation climbed

steeply from 1.5 per cent in October 2009 to 9.9 per cent by

March 2010. What was initially a problem driven by food prices

has now become more generalised. This is reflected in non-food

manufactured products inflation rising from (-) 0.4 per cent in

November 2009 to 4.7 per cent in March 2010. The Reserve Bank

in its Annual policy statement 2010-11, has warned that the current

episode of inflation, which was triggered by supply side factors,

could develop into a wider inflationary process, with demand side

pressures becoming clearly discernible.

The fiscal deficit as of February 2010 had been estimated at 6.5%

of GDP on a rolling basis, slightly below the full year’s estimate of

6.7%. In the Budget for 2010-11, the fiscal deficit for FY 2011 has

been estimated at 5.5% of GDP, a reduction of 1.2% from last year’s

estimate. However, the windfall mobilisation through the recent

3G auction is expected to further reduce the deficit.

The outlook for the Indian economy remains broadly positive, with

GDP projected to grow at 8.5% in 2010-11, subject to the assumption

of a normal monsoon and continued robustness in the growth of

the manufacturing and service sectors. On the downside, global

commodity and energy prices remain volatile and could adversely

impact growth. RBI in its Annual Policy has stated that the monetary

policy stance for 2010-11 is intended to:

• Anchorinflationexpectations,whilebeingpreparedtorespond

appropriately, swiftly and effectively to further build-up of

inflationary pressures.

• Activelymanageliquiditytoensurethatthegrowthindemand

for credit by both the private and public sectors is satisfied in

a non-disruptive way.

• Maintainaninterestrateregimeconsistentwithprice,output

and financial stability.

The policy stance is clearly aimed at promoting growth and ensuring

that there is sufficient liquidity at reasonable rates of interest. The

major challenge, however, will be to achieve these while keeping

inflation within check.

AUTOMOTIVE SECTOR

Aided initially, by the Government of India’s stimulus packages,

most notably, the 4% reduction in excise duties, across the board

and the thrust provided through the JnNURM, the Indian automotive

industry has bounced back from the depressing lows of the previous

year. Sales of medium and heavy commercial vehicles registered

a smart increase of 33% during 2009-10 as against a fall of 33%

during 2008-09, while sales of light commercial vehicles were up by

43% as against a fall of 7% during 2008-09. Cars and multi utility

vehicles recorded an impressive 25% growth in 2009-10 as against

a growth of 12% in 2008-09. While the first half of the year was fairly

subdued, sales of commercial vehicles witnessed significant growth

from September 2009 onwards, driven primarily by a strong revival

in the manufacturing sector. With freight availability improving and

much of the excess capacity in the industry being absorbed, freight

rates have also moved up to reasonable levels, thereby rendering

trucking operations more viable. Ample liquidity and benign interest

rates also contributed to the growth story. However, part of the spurt

in sales in the last quarter of the year is attributable to ‘advance

buying’, prompted by the expected price increases due to commodity

inflation and compliance with the new emission norms that are due

to take effect from October 2010.

OPERATING & FINANCIAL PERFORMANCE

Your Company’s hire purchase and loan disbursements at Rs.5834

cr. during the year, registered a significant growth of 29%, over the

previous year’s figure of Rs.4540 cr., led by a 51% growth, in unit


The net profit for the year from continuing operations was Rs.201.36

cr. (excluding the one-time profit of Rs.25.39 cr. on sale of shares

in WABCO-TVS (INDIA) Limited) as against Rs.150.73 cr. in the

previous year, registering a growth of 34%. The company’s Net-Worth

stood at Rs.1316.36 cr. as on 31.3.2010, while Capital Adequacy

(CRAR) at 16.93% was comfortably higher than the statutory

requirement of 12%. As a measure of prudence and with a view to

strengthen the balance sheet, a general provision at 0.4% of Standard

assets, amounting to Rs. 31.62 cr. has been made during the year.

RESOURCE MOBILISATION

a) Deposits

During 2009-10, your Company mobilised fresh deposits aggregating

to Rs.242.40 cr. Renewal of deposits matured during the year

amounted to Rs.257.04 cr. representing 78% of the matured

deposits. Deposits outstanding at the year-end were at Rs.1094.91

cr. as against Rs.940.06 cr. in the previous year.

As at 31st March 2010, 3,096 deposits amounting to Rs.9.01 cr., had

matured for payment and were due to be claimed or renewed. After

close follow-up, the figures are currently down to 1886 and Rs.4.92

cr. respectively. Steps are continuously being taken to arrange for

repayment or renewal of these deposits. Investor Relation Services

- Deposits continue to enjoy the ISO 9001:2000 certification by

Bureau Veritas Certification (India) Private Limited.

b) Term Funding

During the year, your Company raised term funding in the form of

non-convertible debentures and term loans to the tune of Rs.4141.24

cr., across various tenors.

c) Bank Finance

Your Company’s bankers continue to extend their support, providing

loans at competitive rates. Your Company issued several tranches of

commercial paper aggregating to Rs.2765 cr., during the year. The

maximum amount outstanding at any time was Rs.1500 cr., and the

amount outstanding at the end of the year was Rs.635 cr. As part of

its overall funding plan, your Company reduced its working capital

credit limits with banks from Rs.1800 cr. to Rs.1650 cr.

d) Sell-down of Receivables

During the year, your Company sold hire purchase and hypothecation

loan receivables to the extent of Rs. 303.29 cr.

terms, in the Medium & Heavy Commercial Vehicle (M & HCV)

segment, against the industry growth of 33%, resulting in significant

market share gains during the year. Your Company also achieved a

strong 25% year on year growth, in unit terms, in the Car Finance

segment. The company’s continuing focus on asset quality and its

finely honed credit appraisal and collection skills have ensured that

the portfolio is possibly ‘Best in Class’. Gross NPAs as at 31st March,

2010 stood at 1.26% as against 1.64% in the previous year and Net

NPAs at 0.45% as against 0.75% in the previous year.

The gross receivables being managed by the Company, including

assets sold or securitised stood at Rs.10219 cr. as at 31st March

2010, as against Rs.9203 cr. in the previous year.

Own Funds (Rs. in Cr.)

1400 –

1200 –

1000 –

800 –

600 –

400 –

200 –

0 –2008-092007-08

1043

1153

1316

2009-10

Receivables Under Management (Rs. in Cr.)

12000 –

10000 –

8000 –

6000 –

4000 –

2000 –

0 –2008-09

8925

2007-08 2009-10

920310219


8

CREDIT RATINGS

All the borrowings of the Company are rated. The short term

borrowings (including commercial papers) are rated “A1+/ P1+/

F1+” (highest safety). Fixed Deposits are rated “AAA” (highest

safety). The long term borrowings are rated “AA+” (high safety).

The long term ratings have a “Stable outlook” from ICRA and FITCH

and “Negative outlook” from CRISIL.

OUTLOOK FOR THE YEAR

The current year has begun on an encouraging note. The auto sector

appears to be maintaining the growth trajectory that was witnessed

in the second half of last year, amidst optimistic growth projections

from automotive manufacturers, for the current year. The general

tone for the industry is one of optimism and most indicators appear

positive. On the Commercial vehicle front, the implementation of the

new emission norms, that will become applicable from October 1,

2010 and the resultant increase in truck prices, could impact off take

of trucks in the latter part of the year. The strong growth in the car

segment and the momentum that was witnessed in the previous year

is expected to be maintained during the current year, aided partly

by the launch of several new models in recent months, with a few

more to follow. A revival in infrastructure projects across the country

also bodes well, not only for the road transport and construction

equipment sectors, but for the economy as a whole.

However, it is to be hoped that the irrational exuberance of a few

years ago, which led to excess capacity creation in the CV segment,

is not repeated. While the infrastructure sector presents great

opportunities, it is ironically one of the key concern areas as well,

with the power situation, in particular, threatening to spoil the

growth story. Uncertainties in terms of global events and volatility

in commodity and oil prices could pose problems for the Indian

economy, while inflation continues to be a worry, domestically.

As always, the behaviour of the south-west monsoon will have an

important bearing on the fortunes of the country.

INTERNAL AUDIT

As part of the effort to evaluate the effectiveness of the internal

control systems, your Company’s internal audit department reviews

all the control measures on a periodic basis and recommends

improvements, wherever appropriate. The internal audit department

is manned by highly qualified and experienced personnel and

reports directly to the Audit Committee of the Board. The Audit

Committee regularly reviews the audit findings as well as the

adequacy and effectiveness of the internal control measures.

Additionally, an Information Security Assurance Service is also

provided by independent external professionals. Based on their

recommendations, the Company has implemented a number of

control measures both in operational and accounting related areas,

apart from security related measures.

RISK MANAGEMENT

Your Company, being in the business of financing of commercial

vehicles, cars, other vehicles and equipment in the retail segment,

has to manage various risks. These risks include credit risk, liquidity

risk and interest rate risk. The Risk Management Committee and

the Asset Liability Management Committee periodically review and

monitor these risks.

The Company manages credit risk through stringent credit

norms established through several years of experience in this

line of business and continues to follow the time tested practice

of personally assessing every borrower, before committing to a

credit exposure. This process ensures that the expertise in lending

operations acquired by the Company over decades is put to best

use and acts to mitigate credit risks. Liquidity risk and interest rate

risk arising out of maturity mismatch of assets and liabilities are

managed through regular monitoring of the maturity profiles. The

Company monitors ALM periodically to mitigate the liquidity risk.

The Company also measures the interest rate risk by the duration

gap method.

HUMAN RESOURCES

Your Company believes that its greatest assets are its people and

Training is an investment in long term people development, for

organisational excellence. During the year under review, your

Company has taken several new initiatives to ensure that the

knowledge and wisdom gained over decades is handed down to

the next generation of employees. A well balanced mix of domain

knowledge and behavioural training was taken up towards talent

transformation. These initiatives have paid good dividends in the

form of a strong group of in-house facilitators of domain knowledge

and an inspired team of employees geared to serving the needs of

your company’s valued customers.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements, drawn up in accordance

with the applicable Accounting Standards, form part of the Annual

Report.


In view of this and in accordance with the approval granted by the

Central Government under Section 212(8) of the Companies Act,

1956, the Balance Sheet, Profit and Loss Account, Report of the

Board of Directors and Report of the Auditors of the Subsidiary

Companies, have not been attached to the Balance Sheet of your

Company. The financial information relating to all the Subsidiary

Companies, in the aggregate, has been disclosed in the consolidated

financial statements, as required by the Central Government as part

of its approval. Further,

• The annual accounts of all the Subsidiary Companies

have been posted by your Company on its website –

www.sundaramfinance.in.

• Annual accounts of the Subsidiary Companies and related

detailed information will be available for inspection by

the members, at the head offices of the Company and the

Subsidiary Companies concerned and also will be made

available to the members upon request.

SUBSIDIARIES

• SundaramBNPParibasHomeFinanceLimited

The company, in its eleventh year of operation, approved loans

aggregating Rs.915 cr. as against Rs.600 cr. in the previous

year; disbursements amounted to Rs. 743 cr. as against Rs.532

cr. in the previous year. The company earned a gross income

of Rs.236 cr. as against Rs.213 cr. in the previous year and

reported a profit after tax of Rs.27.72 cr. as against Rs.26.81 cr.

in the previous year. The loan portfolio as at 31st March 2010

stood at Rs.1981 cr. as against Rs.1592 cr. in the previous year.

The gross and net NPA stood at 0.34% and 0.11% respectively

as of 31.03.10, clearly the best in the industry. The company

declared an interim dividend of Re.1/- per share (10% on the

face value of Rs.10/-) for the financial year ended 31st March

2010.

• SundaramBNPParibasAssetManagementCompanyLimited

The Average Assets under Management (AUM) of Sundaram

BNP Paribas Asset Management Company Ltd. was Rs.13878

cr. for the year 2009-10, registering a growth of 49.76% as

compared to Rs.9267 cr. in the previous year. The investor base

of Sundaram BNP Paribas Asset Management Company Limited

stands at 2.34 million, indicating rising retail participation

and confidence. In recognition of their status as one of the

best fund houses in the country, the schemes of Sundaram

BNP Paribas Mutual Fund received several prestigious awards

during the year.

Sundaram BNP Paribas Asset Management Company Limited

earned a gross income of Rs.111.71 cr. as against Rs.86.05

cr. in the previous year. After providing for depreciation and

tax, the company reported a profit of Rs. 20.84 cr. as against

Rs. 10.68 cr. in the previous year. The company recommended

a higher dividend of Rs.4/- per share (40% on the face value

of Rs.10/-) for the financial year ended 31st March 2010.

• SundaramBNPParibasTrusteeCompanyLimited

Sundaram BNP Paribas Trustee Company Limited earned

a gross income of Rs. 124.10 lakhs as against Rs. 105.39

lakhs in the previous year and reported a profit after tax of

Rs. 42.15 lakhs for the year, as against Rs.36.44 lakhs in the

previous year. The company recommended a higher dividend

of Rs.60/- per share (600% on the face value of Rs.10/-) for

the financial year ended 31st March 2010.

• SundaramFinanceDistributionLimited(SFDL)

In spite of significant changes in the regulatory guidelines and

decline in the number of New Fund Offers by mutual funds, the

income from mutual fund distribution has gone up to Rs.1.58

crores during 2009-10 from Rs.1.05 cr. during 2008-09.

Despite reduction in insurance premium levels consequent

to de-tariffing, SFDL earned a higher commission of Rs.4.01

cr. through stepped-up efforts in distribution of insurance

products during the year as against Rs.2.28 cr. in the previous

year. The profit after tax for the year amounted to Rs.1.97

cr. as against Rs.1.37 cr. in the previous year. The company

recommended a higher dividend of Rs.22.50 per share (225%

on the face value of Rs.10/-) for the financial year ended 31st

March 2010.

• LGFServicesLimited

LGF Services Limited, in its sixth year of operation, earned a

higher commission of Rs.5.59 cr. through stepped-up efforts

in the distribution of insurance products as against Rs.4.38

cr. in the previous year. The profit after tax for the year was

higher at Rs.1.83 cr. as against Rs.1.77 cr. in the previous year.

The company recommended a higher dividend of Rs.50/- per

share (500% on the face value of Rs.10/-) for the financial

year ended 31st March 2010.


10

• SundaramInfotechSolutionsLimited(SISL)

The company earned a gross income of Rs.18.82 cr., as against

Rs.9.06 cr. in the previous year, registering an increase of

108%. The profit after tax for the year was at Rs.1.31 cr. as

against loss of Rs.4.43 cr. in the previous year.

• SundaramBusinessServicesLimited(SBSL)

During the year, SBSL earned a gross income of Rs.19.91 cr.,

as against Rs.16.49 cr. in the previous year. The reduction

in the revenue is attributable to low business volumes owing

to recessionary conditions. The company reported a loss of

Rs.3.11 cr. as against profit after tax of Rs.38.58 lakhs earned

in the previous year. The company remains focused on the

Banking, Financial Services and Insurance segments and the

Accounting and Payroll horizontals.

• ProfessionalManagementConsultantsLimited(PMC)

During the year, PMC earned a gross income of Rs.4.86 cr. as

against Rs.8.86 cr. in the previous year due to low business

volumes. The company reported a loss of Rs.68.98 lakhs as

against profit after tax of Rs.68.92 lakhs earned in the previous

year.

• InfreightLogisticsSolutionsLimited(Infreight)

During the year, Infreight earned a gross income of Rs.17.26

cr. as against Rs.30.63 cr. in the previous year. After a trying

year during the Global recession in 2008-09, the company

took some very tough steps to improve its margins. These

included shedding loss making customers, cutting overheads,

increasing productivity of the people and infrastructure and

strengthening recovery of receivables. Overall, the operating

loss has reduced considerably.

• SundaramBNPParibasFundServicesLimited

Sundaram BNP Paribas Fund Services Limited earned an

income of Rs.131.29 lakhs during the period June 2008 to

March 2010 and reported a loss of Rs.689.69 lakhs. Apart

from carrying on the Fund Accounting business, the company

is hopeful of receiving the Registrar & Share Transfer Agency

business of some of the existing asset management companies

in India.

JOINT VENTURES

• RoyalSundaramAllianceInsuranceCompanyLtd

(Royal Sundaram)

Royal Sundaram registered a growth of 13.6% in Gross Written

Premium at Rs.913.11 cr. as against Rs. 803.36 cr. in the

previous year and earned an investment income of Rs.92.74

cr. as against Rs.75.56 cr. in the previous year. The company

reported a higher net profit of Rs.30.97 cr. for the year as

against Rs. 5.66 cr. in the previous year, making for its best

ever performance in the decade since its inception.

• BNP Paribas Sundaram Global Securities Operations Private

Limited

For the period September 2008 to March 2010, BNP Paribas

Sundaram Global Securities Operations Private Limited, which

acts as the business process Off-shoring centre of BNP Paribas

Securities Services in Asia, earned gross income of Rs.40.91

cr. and reported a profit after tax of Rs.4.44 cr. The company

paid a dividend of Re.1/- per share (pro-rata) for the period

ended 30th September 2009 and recommended a dividend

of Rs.4.40 per share (44% on the face value of Rs.10/-) for

the six months ended 31st March 2010.

DIRECTORS

The term of office of Sri Srinivas Acharya as Deputy Managing

Director expired on 31st March 2010. Your Directors wish to place

on record the valuable contribution made by him for the growth and

development of your Company during his tenure as Deputy Managing

Director. Sri Acharya continues as a Director on the Board.

Sri A. Rangaswami, a Director of your Company since 1995, resigned

his directorship effective 1st April 2010. He was the Chairman of the

Audit Committee and Share Transfer & Investor Relations Committee.

Your directors place on record the significant contribution made

by him to the deliberations of the Board and Audit Committee for

over a decade. His association with the Sundaram Finance group

spanned over five decades and his invaluable wisdom and guidance

will be missed.

Consequent to the resignation of Sri A. Rangaswami, Sri S Prasad, an

independent director of your Company, was appointed as Chairman

of the Audit Committee and Share Transfer & Investor Relations


Committee and Sri Srinivas Acharya was appointed as a member

of the Share Transfer & Investor Relations Committee effective

1st April 2010.

Sri S. Viji, Sri S. Ram and Sri T. T. Srinivasaraghavan retire by rotation

and, being eligible, offer themselves for re-election. Necessary

resolutions are submitted for your approval.

AUDITORS

M/s Brahmayya & Co., Chartered Accountants, Chennai, retire and

are eligible for re-appointment. A certificate under Section 224(1B)

of the Companies Act, 1956 has been received from them.

INFORMATION AS PER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956

Your Company has no activity relating to conservation of energy or

technology absorption. During 2009-10, expenditure in foreign

currencies amounted to Rs.145.04 lakhs, on account of interest

and other charges. Foreign Currency earnings amounted to

Rs. 94.78 lakhs.

PERSONNEL

In accordance with the provisions of Section 219(1)(b)(iv) of the

Companies Act, 1956, the Directors’ Report is being sent to all the

shareholders of the Company excluding the annexure prescribed

under Section 217(2A) of the Companies Act. The said annexure,

setting out the names and other particulars of employees, is

available for inspection by the Members at the Registered Office of

the Company during office hours till the date of the Annual General

Meeting.

SUNDARAM FINANCE EMPLOYEE STOCK OPTION SCHEME

Your Board of Directors, based on the recommendations of the

Compensation Committee, granted 17,250 stock options to its

eligible employees, on 28.05.2010. The disclosure required under

SEBI Guidelines, in this regard, is furnished in the Annexure.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your directors confirm that:

1. In the preparation of the annual accounts, the applicable

accounting standards have been followed;

2. They have selected such accounting policies and applied them

consistently and made judgements and estimates that are

reasonable and prudent, so as to give a true and fair view of

the state of affairs of the Company at the end of the financial

year and of the profit of the Company for that period;

3. They have taken proper and sufficient care for the maintenance

of adequate accounting records, in accordance with the

provisions of the Companies Act, 1956 for safeguarding the

assets of the Company and for preventing and detecting fraud

and other irregularities; and

4. They have prepared the annual accounts on a going-concern

basis.

ACKNOWLEDGEMENT

Your directors gratefully acknowledge the support and co-operation

extended to your company by all the customers, depositors,

shareholders, bankers, mutual funds, automotive manufacturers

and vehicle dealers.

For over five and a half decades, your company has been built on

the strong foundation of a set of values that we call the ‘Sundaram

Way’. It is these values that have been our anchor in difficult times

and our beacon when we have forged ahead on the path to growth.

This would not have been possible without the dedication and

unswerving commitment displayed by the employees of the Company,

thus enabling it to report a strong performance during the year.

For and on behalf of the Board

Chennai 600 002 S VIJI 28th May 2010 Chairman


12

S.No Particulars Sundaram Finance Sundaram Finance Employee Stock Option Employee Stock Option Scheme - 2008 - Grant 1 Scheme - 2008 - Grant 2

(a) Options Granted 10,500 17,250

(b) The pricing formula Rs.10/- per share (at par) Rs.10/- per share (at par)

(c) Options vested The above Options would The above Options would vest on 31st May 2010. vest on 31st May 2011.

(d) Options exercised Can be exercised between Can be exercised between 1st June 2010 to 1st June 2011 to 31st August 2010 31st August 2011

(e) The total number of shares arising as a Not Applicable now Not Applicable now result of exercise of Option

(f) Options lapsed Not Applicable Not Applicable

(g) Variation of terms of Options Not Applicable Not Applicable

(h) Money realized by exercise of Option Not Applicable now Not Applicable now

(i) Total number of Options in force 10,500 17,250

(j) Employee-wise details of Options granted to:

i) Senior Managerial Personnel: 10,500 15,750

1 Sri. Srinivas Acharya 1,500 2,000

2 Sri. S Venkatesan 1,000 1,250

3 Sri. P S Raghavan 1,000 1,000

4 Sri. A N Raju 1,000 2,000

5 Sri. Paramesh Krishnaier 1,000 1,500

6 Sri. K Swaminathan 1,000 1,000

7 Sri. M Ramaswamy 1,000 1,750

8 Sri. S Ravindran 750 750

9 Sri. P Viswanathan 750 1,250

10 Sri. S Srinivasan 750 750

11 Sri. S Sivakumar 750 750

12 Sri. Shridhar Iyer – 1,000

13 Sri. M J Kulkarni – 750

AnnexureDisclosure under Clause 12 of the Securities and Exchange Board of India

(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999


S.No Particulars Sundaram Finance Sundaram Finance Employee Stock Option Employee Stock Option Scheme - 2008 - Grant 1 Scheme - 2008 - Grant 2

ii) Any other employee who receives a grant in any Nil 1,500 one year of Option amounting to 5% or more of Option granted during that year:

Sri T P Raman, Managing Director, Sundaram BNP – 1,500 Paribas Asset Management Company Limited

iii) Identified employees who were granted Option, Nil Nil during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

(k) Diluted earnings per share (EPS) pursuant to issue of Not applicable - On exercise Not applicable - On exercise shares on exercise of Option calculated in accordance of the Options, shares will be of the Options, shares will be with Accounting Standard (AS) 20 ‘Earnings Per Share’ transferred from transferred from Sundaram Sundaram Finance Employees Finance Employees Welfare Welfare Trust’s holdings Trust’s holdings

(l) Where the Company has calculated the employee Cost based on Fair Value is Not Applicable now compensation cost using the intrinsic value of the more by Rs.0.04 lakhs stock Options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the Options, shall be disclosed.

The impact of this difference on profits and on Profit would be less by Not Applicable now EPS of the Company shall also be disclosed. Rs.0.04 lakhs and EPS less by Re.0.0001 per share

(m) Weighted average exercise prices and weighted average Not Applicable Not Applicable fair values of Options shall be disclosed separately for Options whose exercise price either equals or exceeds or is less than the market price of the stock.

(n) A description of the method and significant assumptions Black Scholes Model Does not arise used during the year to estimate fair values of Options, including following weighted average information:

i) risk free interest rate, 4.13%

ii) expected life, 368 days

iii) expected volatility, 55.92%

iv) expected dividends, and No dividend rights during the vesting period.

v) the price of the underlying share in market at the time of Option grant. Rs. 276.10


14

Financial Highlights (Rs. in Cr.)

1954 0.02 0.10 0.10

1972 1.00 0.58 8.35 9.86 0.73 0.30 16.00 0.16

1976 1.50 0.99 13.57 19.87 1.78 0.67 16.00 0.24

1978 2.00 1.37 14.65 27.18 2.01 0.77 18.00 0.36

1982 3.00 3.00 45.20 76.60 4.28 1.58 20.00 0.60

1986 6.00 6.59 104.10 184.66 10.35 2.67 16.00 0.96

1990-91 12.00 30.24 201.02 483.21 34.69 12.01 25.00 3.00

1995-96 24.00 204.31 550.44 1637.05 127.50 64.92 35.00 8.40

2004-05 27.78 655.22 740.25 4488.30 144.55 75.99 75.00 21.87

2005-06 27.78 783.06 627.98 5452.18 227.21 170.59@ 135.00# 37.50

2006-07 27.78 850.10 658.47 7327.02 165.01 100.47 105.00 29.17

2007-08 27.78 1015.15 756.62 8925.05 333.02 212.54@ 150.00 41.67

2008-09 55.55 1097.12 940.06 9203.53 257.47 150.73 65.00 36.11

2009-10 55.55 1260.57 1094.91 10218.80 368.29 226.75@ 100.00 55.55

# includes 50% Special Dividend

@ includes profit on sale of shares - Rs.88.13 cr., Rs.76.82 cr. and Rs.25.39 cr. respectively.

Year

Paid-up Reserves

Deposits

Total PBDT

PAT

Dividend

Capital Receivables % Amount

Sources and Distribution of Income (2009-10) Rs. 1248.71 cr.

SOURCES

Leasing 4.50 %

Profit on sale of shares

2.03 %

Services 1.48 %

Others 12.08%

Hire Purchase & Hypothecation Loans

79.91%

DISTRIBUTION

Financial Expenses 50.75%

Establishment Expenses 8.02% Administration

Expenses 4.84%

Depreciation 3.59%

General Provisions on Standard Assets

2.53%Provision and

Write off 4.36%

Taxes 7.75%

Retained Profits

13.09%

Dividend 5.07%


Auditors’ Report To The Members of M/s. Sundaram Finance Limited

1. We have audited the attached Balance Sheet of Sundaram

Finance Limited, Chennai (the Company) as at 31st March

2010, the Profit and Loss Account and the Cash Flow

Statement for the year ended on that date, annexed thereto,

which we have signed under reference to this report. These

financial statements are the responsibility of the company’s

management. Our responsibility is to express an opinion on

these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing

standards generally accepted in India. Those Standards require

that we plan and perform the audit to obtain reasonable

assurance whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the

accounting principles used and significant estimates made

by the management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order,

2003 as amended by the Companies (Auditor’s Report)

(Amendment) Order, 2004 (together the ‘Order’) issued

by the Central Government in terms of sub-section (4A) of

Section 227 of the Companies Act, 1956 (the Act), and based

on the information and explanations given to us, we give in the

Annexure a statement on the matters specified in paragraphs

4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above,

we report that:

i. We have obtained all the information and explanations,

which to the best of our knowledge and belief were

necessary for the purposes of our audit.

ii. in our opinion, proper books of account as required by

law have been kept by the Company so far as appears

from our examination of those books.

iii. the Balance Sheet, Profit and Loss Account and Cash Flow

Statement dealt with by this report are in agreement with

the books of account.

iv. in our opinion, the Balance Sheet, Profit and Loss

Account and Cash Flow Statement dealt with by this

report comply with the accounting standards referred

to in sub-section (3C) of Section 211 of the Act, to the

extent applicable.

v. On the basis of written representations received from the

directors, as on 31st March 2010 and taken on record

by the Board of Directors, we report that none of the

Directors is disqualified as on 31st March 2010 from

being appointed as a Director in terms of clause (g) of

sub-section (1) of Section 274 of the Act, and

vi. in our opinion and to the best of our information

and according to the explanations given to us, the

said accounts together with the notes thereon give

the information required by the Act in the manner so

required and give a true and fair view in conformity with

accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs

of the Company as at 31st March 2010;

b) in the case of the Profit and Loss Account, of the

profit for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash

flows for the year ended on that date.

For BRAHMAYYA & CO.,

Chartered Accountants

Registration No.000511S

L.RAVI SANKAR

Place: Chennai Partner

Date: 28th May, 2010 Membership No. 25929


16

Annexure To The Auditors’ Report Referred to in Paragraph 3

of our Report of Even Date1. a) The Company is maintaining proper records showing full

particulars, including quantitative details and situation

of fixed assets.

b) The Company has a phased programme of physical

verification of fixed assets, which in our opinion, is

reasonable having regard to the size of the Company

and nature of fixed assets. In accordance with the

programme, the fixed assets have been physically verified

by the management during the year. The discrepancies

noticed on such verification were not material and have

been properly dealt with in the books of account.

c) In our opinion and according to the information and

explanations given to us, a substantial part of fixed assets

have not been disposed off by the Company during the year.

2. a. i) The Company has granted unsecured loans to seven

companies covered in the register maintained

under Section 301 of the Act. The maximum

amount involved during the year was Rs. 109,24.37

lakhs. The balance outstanding at the end of the year

was Rs. 86,57.61 lakhs.

ii) The rate of interest and other terms and conditions

of the loan are, prima facie, not prejudicial to the

interest of the Company.

iii) The payment of interest and the repayment of

principal are regular.

iv) There is no amount overdue on the loans.

v) Apart from the above, the Company has not granted

loans to companies, firms or other parties covered in

the register maintained under Section 301 of the Act.

b. i) The Company has taken secured loans comprising

of debentures from one company covered in the

register maintained under Section 301 of the Act.

The maximum amount involved during the year was

Rs.30,00.00 lakhs. The balance outstanding at the

end of the year was Rs.30,00.00 lakhs.

ii) The rate of interest and other terms and conditions

of the loan are, prima facie, not prejudicial to the

interest of the Company.

iii) The payment of interest is regular.

iv) There is no amount overdue on the loans.

Apart from the above, the Company has not taken loans from

companies, firms or other parties covered in the register

maintained under Section 301 of the Act.

3. In our opinion and according to the information and

explanations given to us, there are adequate internal control

procedures commensurate with the size of the Company and

the nature of its business with regard to purchases of fixed

assets and sale of goods and services. During the course

of our audit, no major weakness has been noticed in the

above controls and therefore the reporting of the same does

not arise.

4. a) To the best of our knowledge and belief and according

to the information and explanations given to us, we

are of the opinion that the particulars of contracts or

arrangements referred to in Section 301 of the Act that

need to be entered in the register maintained under

that Section have been so entered.

b) In our opinion, according to the information and

explanations given to us, the transactions made in

pursuance of such contracts or arrangements entered

in the register maintained under Section 301 of the Act

and exceeding the value of rupees five lakhs in respect of

any party during the year, prima facie, have been made

at prices which are reasonable having regard to the

nature of the service and the prevailing market prices

at the relevant time.


explanations given to us, the company has complied with the

directives issued by Reserve Bank of India and the provisions

of Section 58A, Section 58AA or any other relevant provisions

of the Act, and the rules framed thereunder with regard to

deposits accepted from the public.

6. The Company has an internal audit system, which in our

opinion, is commensurate with the size and the nature of its

business.


7. The Central Government has not prescribed the maintenance

of cost records under Section 209(1)(d) of the Act.

8. a) According to the records of the Company and the

information and explanations given to us, undisputed

statutory dues including provident fund, employee state

insurance, income tax, wealth tax, service tax, sales tax,

value added tax, customs duty and excise duty were

regularly deposited during the year with the appropriate

authorities.

b) According to the information and explanations given to

us, there are no undisputed amounts payable in respect

of income tax, wealth tax, service tax, sales tax, excise

duty and cess which are outstanding as at 31st March,

2010 for a period of more than six months from the date

they became payable.

9. According to the records of the Company and the information

and explanations given to us, there are no dues of wealth

tax, customs duty, excise duty and cess which have not been

deposited on account of dispute. Details of disputed sales tax

and service tax not deposited are as follows:

Nature Amount Period to Forum of (Rs. in which the where the dues lakhs) amount relates dispute is pending

Sales 914.22 Assessment Various appellate Tax years authorities 1993-94 to 2004-2005

Service 867.93 2003-2004 to Commissioner Tax June 2009 (Appeals)

(Large Tax Payer Unit)

10. The Company does not have any accumulated losses at the end

of the financial year and has not incurred cash losses during

the current and immediately preceding financial year.

11. Based on our audit procedures and on the information and

explanations given by the management, we are of the opinion

that the Company has not defaulted in repayment of dues to

financial institutions, banks or debenture holders.

12. According to the information and explanations given to us,

the Company has not granted loans or advances on the basis

of security by way of pledge of shares, debentures and other

securities.

13. The provisions of any special statute applicable to chit fund

/ nidhi / mutual benefit societies are not applicable to the

Company.

14. Based on our examination of records and the information and

explanations given to us, the Company does not deal/trade in

shares, securities, debentures and other investments.


explanations given to us, the Company has not given

guarantees for loans taken by others from banks and financial

institutions.

16. To the best of our knowledge and belief and according to the

information and explanations given to us, term loans availed by

the Company, prima facie, were applied by the Company during

the year for the purposes for which the loans were obtained,

other than temporary deployment, pending application.

17. According to the cash flow statement and other records

examined by us and the information and explanations given

to us, on an overall examination of the Balance Sheet of the

Company, funds raised on short term basis, prima facie, have

not been used during the year for long term investment.

18. According to the information and explanations given to us,

the Company has created securities in respect of secured

debentures issued, except one series of secured debentures

of face value of Rs.95,00.00 lakhs issued in March 2010 in

respect of which we have been informed that the security would

be created within the stipulated time.

19. The Company has not raised money by public issues during

the year.

20. To the best of our knowledge and according to the information

and explanations given to us, during the year no fraud on or

by the Company was noticed or reported during the course

of our audit.


explanations given to us, the nature of the company’s business

/ activities during the year have been such that clauses ii, xiii

and xviii of paragraph 4 of the Companies (Auditors’ Report)

Order, 2003 are not applicable to the Company for the year.




L. RAVI SANKAR




18

(Rs. in Lakhs)

Schedule 31.03.2010 31.03.2009

I SOURCES OF FUNDS

1. Shareholders’ Funds

a) Capital 1 55,55.19 55,55.19

b) Stock Option Outstanding Account 2 23.28 –

c) Reserves and Surplus 3 1260,57.18 1316,35.65 1097,11.81 1152,67.00

2. Loan Funds

a) Secured Loans 4 5884,17.27 4177,28.12

b) Unsecured Loans 5 2609,60.87 8493,78.14 2084,79.20 6262,07.32

Total 9810,13.79 7414,74.32

II APPLICATION OF FUNDS

1. Fixed Assets 6

a) Gross Block 466,28.07 507,88.66

b) Less: Depreciation 231,93.45 301,82.89

c) Net Book Value 234,34.62 206,05.77

d) Add: Lease Adjustment Account (1,96.82) (3,64.72)

e) Net Block 232,37.80 202,41.05

2. Investments 7 537,44.80 511,88.87

3. Deferred Tax Asset (Net) 8

Deferred Tax Asset 61,24.40 56,91.36

Less: Deferred Tax Liability 5,90.75 55,33.65 5,96.62 50,94.74

4. Current Assets, Loans and Advances

a) Current Assets 9 1664,89.36 688,76.04

b) Loans and Advances 10 7993,63.96 6539,55.77

(A) 9658,53.32 7228,31.81

Less: Current Liabilities and Provisions

a) Current Liabilities 11 550,84.13 503,60.94

b) Provisions 12 122,71.65 75,21.21

(B) 673,55.78 578,82.15

Net Current Assets (A-B) (A-B) 8984,97.54 6649,49.66

Total 9810,13.79 7414,74.32

Notes to the Accounts 19

Balance Sheet as at 31st March, 2010

As per our report of even date attached S. Viji S. Ram

For Brahmayya & Co., Chairman S. NarayananChartered Accountants Srinivas Acharya

L. Ravi Sankar T. T. Srinivasaraghavan T. R. SeshadriPartner Managing Director S. Ravindran S. PrasadChennai, S. Venkatesan Aroon Raman28th May, 2010 CFO & Secretary Directors





(Rs. in Lakhs) Schedule 2009-10 2008-09INCOMEIncome from Operations 13 1181,89.37 1082,77.62Profit on Sale of Shares 25,38.90 –Other Income 14 41,42.57 31,99.28 TOTAL (A) 1248,70.84 1114,76.90

EXPENDITUREFinancial Expenses 15 633,79.55 645,44.09Establishment Expenses 16 100,11.23 94,07.97Administrative and Other Expenses 17 60,42.27 71,60.91General Provision on Standard Assets 31,61.69 –Provisions and Write Off 18 54,46.90 46,16.80Depreciation 44,81.57 37,76.10 TOTAL (B) 925,23.21 895,05.87 Profit before Tax (A) - (B) 323,47.63 219,71.03Taxation – Current (Including Wealth Tax) 101,11.69 80,96.70– Deferred (4,38.92) (13,48.81)– Fringe Benefit Tax – 96,72.77 1,50.00 68,97.89 Profit after Tax 226,74.86 150,73.14 Add: Balance brought forward from Previous Year 41,96.67 47,14.63Transfer from Special Reserve 76,00.00 –Amount available for Appropriation 344,71.53 197,87.77

APPROPRIATIONSDividend – Interim 33,33.12 22,22.08– Final (proposed) 22,22.07 13,88.80– Dividend Tax 7,74.30 4,87.60Special Reserve – 2,00.00Statutory Reserve 45,40.00 30,20.00General Reserve 175,00.00 82,72.62Surplus - Balance carried to Balance Sheet 61,02.04 41,96.67 344,71.53 197,87.77Notes to the Accounts 19Earnings per Equity Share (Refer Note 4.4 Schedule 19)Number of Shares considered 5,55,51,930 5,55,51,930(Face Value Rs.10/- per share)Basic and Diluted earnings per share (in Rupees) 40.82 27.13

Profit and Loss Account for the Year Ended 31st March, 2010


20

SCHEDULES(Rs. in Lakhs)

31.03.2010 31.03.20091 Capital Authorised 10,00,00,000 Equity Shares of Rs.10/- each 100,00.00 100,00.00

Issued, Subscribed and fully paid-up 55,55.19 55,55.19 5,55,51,930 Equity Shares of Rs.10/- each (includes 5,09,75,545 Equity Shares allotted as fully paid-up by way of bonus shares by Capitalisation of Reserves and Securities Premium and 37,75,965 Equity Shares of Rs.10/- each allotted for consideration other than cash pursuant to a Scheme of Amalgamation)

2 Stock Option Outstanding Account 27.94 – Less: Deferred Employee Compensation Cost 4.66 23.28 – –

3 Reserves and Surplus

Capital Reserve 50,79.64 50,79.64

Securities Premium Account Per Last Balance Sheet – 15,04.97 Less: Issue of bonus shares – – 15,04.97 –

General Reserve Per Last Balance Sheet 670,00.00 600,00.00 Less: Issue of bonus shares – 12,72.62 Add: Transfer from Profit and Loss account 175,00.00 845,00.00 82,72.62 670,00.00

Statutory Reserve Per last Balance Sheet 258,35.50 228,15.50 Add: Transfer from Profit and Loss account 45,40.00 303,75.50 30,20.00 258,35.50

Special Reserve Per Last Balance Sheet 76,00.00 74,00.00 Less: Transfer to Profit and Loss account 76,00.00 – Add: Transfer from Profit and Loss account – – 2,00.00 76,00.00 Surplus - Balance in Profit and Loss account 61,02.04 41,96.67 1260,57.18 1097,11.81 4 Secured Loans Non - Convertible Debentures 3176,82.03 2339,06.86 From Scheduled Banks 2707,35.24 1738,21.26 From International Finance Corporation – 100,00.00 5884,17.27 4177,28.12 5 Unsecured Loans Fixed Deposits From Public 1088,49.35 933,72.97 From Directors 6,41.54 1094,90.89 6,33.08 940,06.05 Non - Convertible Debentures 335,00.00 503,00.00 Subordinated Non Convertible Debentures 245,00.00 50,00.00 Debenture Application Money – 75,00.00 Short Term Loans and advances From Scheduled Banks 302,37.82 35,99.53 From Others 11,04.00 1,50.00 Commercial Paper 621,28.16 479,23.62 2609,60.87 2084,79.20


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22

SCHEDULES (Rs. in Lakhs)

Face Value (FV) 31.03.2010 31.03.20097 Investments

Long Term - At Cost

I In Government / Trust Securities

Non Trade

A Quoted:

Government Securities

Central Government Loans 98,39.30 98,78.16 99,81.68 (Face Value of Rs.789.30 lakhs purchased during the year and Face Value of Rs.1000 lakhs matured during the year)

State Government Loans 23,48.00 23,71.54 – (Face Value of Rs.2348 lakhs purchased during the year)

121,87.30 122,49.70 99,81.68

B Unquoted:

Trust Securities

Investment in Mutual Funds

Pru ICICI FMP Series 41 - 17 Months Plan - Cumulative – 3,50.00 (35,00,000 units of Rs.10/- each redeemed during the year)

Birla MF - FTP - Series AE - Growth – 3,50.00 (35,00,000 units of Rs.10/- each redeemed during the year)

Reliance Fixed Horizon Fund IV Series 6 - Growth – 3,50.00 (35,00,000 units of Rs.10/- each redeemed during the year)

Reliance Fixed Horizon Fund IV-Series 7 - Growth – 2,50.00 (25,00,000 units of Rs.10/- each redeemed during the year)

Sundaram BNP Paribas MF Fixed Term Plan C - Growth – 5,00.00 (50,00,000 units of Rs.10/- each redeemed during the year)

HSBC Fixed Term Series 41 - Growth – 4,00.00 (40,00,000 units of Rs.10/- each redeemed during the year)

Sundaram BNP Paribas Energy Opportunities - Growth @ 1,66.60 92.13 (20,00,000 units of Rs.10/- each)

1,66.60 22,92.13

II In Equity Shares - Fully paid

Quoted

Sundaram Clayton Limited 17,19.14 5.87 45,46,170 Equity Shares of Rs.5/- each (11,13,019 Equity Shares of Rs.5/- each purchased during the year and 22,73,085 Equity Shares of Rs.5/- each alloted as bonus shares during the year)

Wheels India Ltd. 8,38.14 8,38.14 13,33,741 Equity Shares of Rs.10/- each

Reliance Industries Ltd. @ 3,47.22 3,11.11 40,850 Equity Shares of Rs.10/- each (20,425 Equity Shares of Rs.10/- each alloted as bonus shares during the year)

Carried forward 29,04.50 11,55.12



7 Investments (contd.) 31.03.2010 31.03.2009

Brought forward 29,04.50 11,55.12

India Motor Parts & Accessories Ltd. 2,79.26 2,79.26

7,35,392 Equity Shares of Rs.10/- each

Techtran Polylenses Ltd. @ 32.13 16.90


IDBI Ltd. @ 11.40 6.46

14,240 Equity Shares of Rs.10/- each

WABCO - TVS (India) Limited – 3.16

(11,60,066 Equity Shares of Rs.5/- each sold during the year)

32,27.29 14,60.90

Unquoted:

i) In Subsidiary Companies:

Sundaram BNP Paribas Home Finance Ltd. * 61,39.10 61,39.10

4,01,56,296 Equity Shares of Rs.10/- each

Sundaram BNP Paribas Fund Services Ltd. * 15,15.00 –


(1,51,50,000 Equity Shares of Rs.10/- each subscribed at par during the year)

Sundaram Business Services Ltd. 15,00.00 15,00.00


Sundaram BNP Paribas Asset Management Co. Ltd.* 12,09.86 12,09.86


Infreight Logistics Solutions Ltd. $ 4,41.00 4,41.00


Sundaram Infotech Solutions Ltd. 4,00.00 4,00.00


Sundaram Finance Distribution Ltd. 65.18 65.18


LGF Services Ltd. 5.00 5.00


Sundaram BNP Paribas Trustee Company Ltd.* 2.51 2.51




24


ii) In Joint Venture Companies

Royal Sundaram Alliance Insurance Company Ltd. 105,24.33 105,24.33


BNP Paribas Sundaram Global Securities Operations Pvt. Ltd. * 3,18.50 –


(31,85,000 Equity Shares of Rs.10/- each subscribed at par during the year)

iii) In Associate Companies

The Dunes Oman LLC (FZC) 22,64.33 18,32.15

19,28,700 Equity Shares of value 1 Omani Riyal each

(3,65,200 Equity Shares of value 1 Omani Riyal subscribed at par during the year)

Axles India Ltd. 10,15.70 10,15.70


Sundaram Hydraulics Ltd. 7,35.00 7,35.00


Turbo Energy Ltd. 1,88.41 1,88.41


Sundaram Dynacast Private Ltd. 1,17.00 1,17.00


Transenergy Ltd. 30.00 30.00


iv) In Other Companies

Equifax Credit Information Services Pvt. Ltd. * 5,00.00 –



Experian Credit Information Company of India Pvt. Ltd. 4,20.00 –




* These shares are subject to a lock in period




SCHEDULES


Credit Information Bureau (India) Ltd. 1,25.01 1,25.01


Vishnu Forge Industries Ltd. 45.93 45.93


Lucas-TVS Ltd. 27.22 27.22


Delphi TVS Diesel Systems Ltd. 18.15 18.15


Brakes India Ltd. 15.33 15.33


NTTF Industries Ltd. 15.00 15.00


276,37.56 244,51.88

$ Less: Provision for diminution in the value of investments 4,41.00 –

271,96.56 244,51.88

III In Preference Shares

Unquoted:

Axles India Ltd. 6,00.00 6,00.00

12%, 6,00,000 Redeemable Cumulative

Non-Convertible Preference Shares of Rs.100/- each 6,00.00 6,00.00

A) Non Trade - Quoted

Reliance Industries Ltd. 1,30.05 1,30.05

1,29,880 Zero Coupon Secured Redeemable

Non-Convertible Debentures of Rs.100/- each

1,30.05 1,30.05

B) Non Trade - Unquoted

Rural Electrification Corporation Limited 50.00 50.00

5.50%, 500 Non-Convertible Redeemable Taxable

Bonds Series VII of Rs.10000/- each 50.00 50.00

(Rs. in Lakhs)



26

Current Investments

a) In Trust Securities (Unquoted) Sundaram BNP Paribas Capex Opportunities Fund - Growth 1,23.77 1,23.77 (12,37,742.09 units of Rs.10/- each)

Sundaram BNP Paribas Rural India Fund - Growth@ 5,00.00 3,13.31 (45,17,936.21 units of Rs.10/- each)

Sundaram BNP Paribas Select Focus - Appreciation@ 5,00.00 4,16.66 (8,71,148.43 units of Rs.10/- each)

Reliance Quarterly Interval Fund – Series II – Inst. Growth 40,00.43 – (3,20,39,067.733 units of Rs.10/- each purchased during the year)

Birla Sunlife Short Term Opportunities Fund – Inst. – G 10,00.00 – (96,19,269.32 units of Rs.10/- each purchased during the year)

Birla Sunlife FT Fund - Long Term – Inst. – G 40,00.40 – (3,71,19,182.39 units of Rs.10/- each purchased during the year)

Canara Robeco Liquid Super Institutional - Growth – 4,51.40 (42,23,556.22 units of Rs.10/- each redeemed during the year)

Birla Sunlife Cash Manager - Institutional - Growth – 10,02.98 (68,35,363.35 units of Rs.10/- each redeemed during the year)

Birla Sunlife Cash Plus - Institutional - Growth – 1.81 (12,908.22 units of Rs.10/- each redeemed during the year)

Religare Ultra Short Term Fund - Institutional -Growth – 750.59 (62,33,469.60 units of Rs.10/- each redeemed during the year)

ING Liquid Fund - Super Institutional - Growth – 5,00.00 (38,03,033.30 units of Rs.10/- each redeemed during the year)

ICICI Pru Liquid Plan - Super Institutional -Growth – 5,00.00 (38,50,063.14 units of Rs.10/- each redeemed during the year)

Kotak Liquid (Institutional Premium) - Growth – 11,50.00 (64,50,708.18 units of Rs.10/- each redeemed during the year)

Sundaram BNP Paribas Ultra Short Term Fund - Super Inst. -Growth – 15,01.01 (1,27,71,217.07 units of Rs.10/- each redeemed during the year)

SBI Premier Liquid Fund - Super Institutional - Growth – 5,00.00 (35,99,634.28 units of Rs.10/- each redeemed during the year)

Reliance Liquid Fund -Treasury Plan-Institutional-Growth – 10,00.91 (46,71,208.78 units of Rs.10/- each redeemed during the year)

Templeton India Treasury Management - Super Institutional-Growth – 7,50.65 (57,502.93 units of Rs.1000/- each redeemed during the year)

UTI Liquid Cash Plan - Institutional - Growth – 7,50.00 (51,878.25 units of Rs.1000/- each redeemed during the year)

HDFC Liquid Fund - Premium Plan - Growth – 5,00.00 (28,37,121.89 units of Rs.10/- each redeemed during the year)

Fidelity Ultra Short Term Fund - Institutional - Growth – 10,00.17 (91,26,860.79 units of Rs.10/- each redeemed during the year)

Tata Floater Fund - Growth – 10,00.75 (76,65,960.10 units of Rs.10/- each redeemed during the year)

Fortis Money Plus - Institutional - Growth – 8.22 (62,781.92 units of Rs.10/- each redeemed during the year)

101,24.60 122,22.23




SCHEDULES

SUMMARY OF INVESTMENTS

I In Government / Trust Securities

A Quoted 122,49.70 99,81.68

B Unquoted - Long Term 1,66.60 22,92.13

C Unquoted - Current 101,24.60 122,22.23

II In Equity Shares

A Quoted 32,27.29 14,60.90

B Unquoted 271,96.56 244,51.88

III In Preference Shares - Unquoted 6,00.00 6,00.00

IV In Bonds / Debentures / Others

A Quoted 1,30.05 1,30.05

B Unquoted 50.00 50.00

GRAND TOTAL 537,44.80 511,88.87

Cost MV# 31.03.2010

Aggregate of quoted Investments - Long Term

Government Securities 122,49.70 117,56.95

Equity Shares 32,27.29 118,98.72

Debentures 1,30.05 1,30.05

(A) 156,07.04 237,85.72

Aggregate of unquoted Investments - Long Term

Trust Securities 1,66.60

Equity Shares 271,96.56

Preference Shares 6,00.00

Bonds 50.00

(B) 280,13.16

Aggregate of unquoted Investments - Current

Trust Securities 101,24.60

(C) 101,24.60

GRAND TOTAL [A + B + C] 537,44.80

# Cost has been considered wherever market value is not available. @ These Investments have been restated at their cost

(Rs. in Lakhs)



28

Units of Mutual Funds Purchased and Redeemed during the year

Current Investments

Name of the Fund Face Value Units Amount

(Rs.) (in lakhs) (Rs in lakhs)

Axis Treasury Advantage Fund - Growth 1,000 1 10,00

Baroda Pioneer Liquid Fund - Institutional Plan - Growth 10 2,39 25,00

Baroda Pioneer Treas. Adv. Fund – Institutional Plan Growth 10 2,43 25,00

Birla Sunlife Cash Manager - Institutional – Growth 10 2,09 31,00

Birla Sunlife Cash Plus - Institutional Premium - Growth 10 38,32 563,45

Birla Sunlife Savings Fund - Institutional Plan - Growth 10 12,34 212,04

Birla Sunlife Short Term Fund - Institutional Plan - Growth 10 17,95 190,11

Canara Robeco Dynamic Bond Fund 10 50 5,00

Canara Robeco Floating Rate Fund-Short Term-Growth 10 11,53 159,13

Canara Robeco Liquid Super Institutional - Growth 10 15,45 169,59

Canara Robeco Treas. Advantage - Super Institutional Plan - Growth 10 12,95 175,20

DBS Chola Freedom Income Short Term - Institutional - Growth 10 71 10,00

DBS Chola Liquid Super Institutional Plan - Cumulative 10 82 10,00

DSP Black Rock Money Manager Fund - Institutional - Growth 1,000 2 20,00

DWS Insta Cash Plus Fund - Institutional Plan - Growth 10 3,19 45,00

DWS Money Plus Fund - Institutional Plan - Growth 10 2,47 25,00

Fidelity Cash Fund Super Institutional - Growth 10 4,03 49,50

Fidelity Ultra Short Term Debt Fund - Super Institutional - Growth 10 5,15 59,55

Fortis Money Plus Fund - Institutional - Growth 10 23,78 322,53

Fortis Overnight Fund - Institutional Plan - Growth 10 33,76 464,72

HDFC Cash Management Fund - Treas. Plan - Wholesale - Growth 10 15,51 303,60

HDFC Cash Management Fund-Savings Plan - Growth 10 3,50 66,00

HDFC Liquid Fund - Premium Plan - Growth 10 10,67 192,00

HDFC Liquid Fund - Premium Plus Plan - Growth 10 6,16 110,50

HSBC Floating Rate Fund - Long Term - Institutional - Growth 10 33 4,57

ICICI Pru Flexible Income Plan Premium - Growth 10 18,20 311,06

ICICI Prudential Institutional Liquid Plan - Super Institutional Plan - Growth 10 28,07 451,95

IDFC Cash Fund - Super Institutional Plan C - Growth 10 22,98 257,01

IDFC Money Manager Fund - Treas. Plan - Super Institutional Plan C - Growth 10 16,33 174,02

IDFC Money Manager Fund- Institutional Plan-B - Growth 10 3,10 43,01

ING Liquid Fund - Super Institutional Plan - Growth 10 4,50 60,00

SCHEDULES


ING Treasury Advantage Fund - Institutional - Growth 10 2,19 26,01

JP Morgan India Liquid Fund - Super Institutional -Growth 10 20,28 235,21

JP Morgan India Treasury Fund - Super Institutional - Growth 10 18,45 215,02

Kotak Flexi Debt Scheme - Institutional - Growth 10 38,45 424,08

Kotak Liquid (Institutional Premium) - Growth 10 31,28 572,50

LIC Floating Rate Fund - Short Term - Growth 10 10,43 154,55

LIC Liquid Fund - Growth 10 69,04 1145,64

LIC Savings Plus Fund - Growth 10 35,76 511,17

Peerless Liquid Fund Super Inst. Growth 10 50 5,00

Peerless Ultra Short Term Fund Super Inst. Growth 10 50 5,00

Principal Cash Management Fund - Institutional Premium-Growth 10 3,57 49,50

Principal Ultra Short Term Fund - Growth Plan 10 4,34 49,51

Reliance Liquid Fund - Treasury Plan - Institutional Plan - Growth 10 34,12 750,95

Reliance Liquidity Fund - Institutional Plan - Growth 10 1,88 25,00

Reliance Money Manager Fund - Institutional Plan - Growth 1,000 40 486,95

Reliance Medium Term Fund – Retail Plan – Growth 10 1,74 33,00

Religare Liquid Fund - Super Institutional - Growth 10 20,28 250,51

Religare Ultra Short Term Fund - Institutional - Growth 10 15,76 194,05

Religare Credit Opportunities Fund IP Growth 10 3,22 33,00

SBI Premier Liquid Fund - Super Institutional Plan-Growth 10 3,40 48,00

SBI SHF Ultra Short Term Fund - Institutional Plan - Growth 10 4,55 53,01

Sundaram BNP Paribas Money Fund - Super Institutional - Growth 10 24,18 457,50

Sundaram Ultra Short Term Fund - Super Institutional - Growth 10 25,11 303,12

TATA Floater Fund - Growth 10 11,97 159,07

TATA Floating Rate Short Term - Institutional Plan - Growth 10 15,26 216,00

TATA Liquid Super High Inv. Fund - Appreciation 1,000 10 168,00

TATA Treasury Manager - SHIP - Growth 1,000 13 134,15

Templeton India Treasury Management - Super Institutional -Growth 1,000 27 355,00

Templeton India Ultra Short Bond Fund - Super Institutional -Growth 10 27,89 320,57

UTI Liquid Fund - Cash Plan - Institutional - Growth 1,000 23 337,00

UTI Treasury Advantage Fund - Institutional - Growth 1,000 20 238,54

UTI Floating Rate Fund Short Term Plan Institutional Plan Growth 1,000 5 55,01

Current Investments (Contd.)

Name of the Fund Face Value Units Amount

(Rs.) (in lakhs) (Rs in lakhs)

SCHEDULES


30

SCHEDULES

(Rs. in Lakhs)

31.03.2010 31.03.2009

8 Deferred Tax Asset (Net)

Deferred Tax Assets

Provision for Investments, Standard Assets, Non-performing Assets, etc. 46,18.36 37,79.46

Income deferment on Non-performing Assets 3,35.44 5,59.33

Depreciation 8,86.61 11,25.20

Others 2,83.99 2,27.37

61,24.40 56,91.36

Less: Deferred Tax Liabilities

Hire Purchase Income 5,68.38 5,76.57

Others 22.37 5,90.75 20.05 5,96.62

55,33.65 50,94.74

9 Current Assets

a) Stock-on-hire and bills purchased

Net Investment in Stock-on-hire 217,61.96 281,78.48

Repossessed assets 10,76.35 13,42.01

Debtors on Securitisation 19.23 75.88

Trade bills purchased (unsecured, considered good):

Outstanding for a period exceeding six months – 1,89.00

Others 5,97.35 5,97.35 19,52.95 21,41.95

Net Investment in lease 45,16.06 44,83.81

279,70.95 362,22.13

b) Interest accrued on investments 1,64.94 1,21.60

c) Cash and bank balances

With scheduled banks in:

Current Accounts 12,90.86 35,43.11

Unpaid dividend account 59.27 98.11

Deposit accounts 1347,08.36 267,18.55

Cash on hand 12,62.41 11,54.57

Stamps and Stamp Papers on hand 58.16 1373,79.06 43.56 315,57.90

d) SFL Shares Trust 5,94.30 5,94.30

e) SFL Employees Welfare Trust 3,80.11 3,80.11

1664,89.36 688,76.04


10 Loans and Advances

Unsecured unless otherwise stated:

Considered good:

Secured Loans 7599,76.19 6174,95.16

Unsecured Loans

– Subsidiary Companies 23,50.00 35,59.94

– Others 30,66.78 21,42.05

Advance Income Tax and Tax Deducted at 67,11.98 64,63.78

Source (Net of Provision)

Advance Fringe Benefit Tax (Net of Provision) 21.64 23.40

Advances and deposits recoverable in cash or kind or for value to be received

– Subsidiary Companies 69.65 1,12.91

– Others 23,29.29 44,47.26

Advance for purchase of assets

– Business Assets 129,32.96 75,40.11

– Others 30,72.86 31,74.83

Income receivable 88,32.61 89,96.33

7993,63.96 6539,55.77

11 Current Liabilities*

Sundry Creditors

– For expenses 48,02.31 39,10.72

– For other finance 234,98.90 210,64.64

Unpaid dividend 59.27 98.11

Interest accrued but not due 267,23.65 252,87.47

550,84.13 503,60.94

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund

12 Provisions

Non-performing assets 64,70.12 59,63.94

Standard Assets 31,61.69 –

Investments 1,41.68 37.27

Dividend 22,22.07 13,88.80

Dividend Tax and Surcharge 2,76.09 1,31.20

122,71.65 75,21.21

(Rs. in Lakhs)

31.03.2010 31.03.2009

SCHEDULES


32

SCHEDULES

13 Income from Operations

Hire Purchase / Hypothecation Loans (net) 997,84.62 934,96.25 (tax deducted at source Rs.174.18 lakhs)

Lease (net) 56,22.08 38,93.72 (tax deducted at source Rs.125.32 lakhs)

Investments 62,07.04 42,44.88 (tax deducted at source Rs.93.09 lakhs)

Profit on Securitisation / Selldown of Receivables 29,34.07 28,49.04

Interest on Loans 5,49.34 4,54.34 (tax deducted at source Rs.63.96 lakhs)

Bills Purchased 1,84.97 2,00.15

Services 18,47.51 24,14.52 (tax deducted at source Rs.190.76 lakhs)

Recovery of Bad debts and Recovery of Loss on Sale of assets 9,66.98 6,31.53

Profit on Sale of Leased Assets 92.76 93.19

1181,89.37 1082,77.62

14 Other Income

Interest receipts 5,92.33 1,05.82 (tax deducted at source Rs.0.85 lakhs)

Dividend – Subsidiary Companies 10,18.38 8,57.75

– Others 11,79.27 7,71.14

Rent receipts 9,09.86 9,71.36 (tax deducted at source Rs.157.04 lakhs)

Profit on sale of assets 29.38 33.45

Miscellaneous income 4,13.35 4,59.76

41,42.57 31,99.28

15 Financial Expenses

Interest – Fixed loans 226,41.00 245,43.69

– Debentures 339,95.71 310,02.80

– Others 95.58 20,61.72

Other financial expenses 66,47.26 69,35.88

633,79.55 645,44.09

(Rs. in Lakhs)

2009-10 2008-09


SCHEDULES

16 Establishment Expenses

Salaries, allowances, commission and bonus 92,73.29 86,33.21

Company’s contribution to Provident Fund, Gratuity, 4,76.24 5,47.25

Superannuation and Employees’ State Insurance schemes

Staff welfare expenses 2,61.70 2,27.51

100,11.23 94,07.97

17 Administrative and other expenses

Rent 6,99.04 6,82.94

Rates and taxes 3,92.23 3,85.29

Communication expenses 6,87.08 7,42.24

Electricity expenses 3,48.70 3,96.85

Travelling and conveyance (net) 6,84.64 7,36.70

Advertisement charges 2,05.30 2,69.39

Outsourcing cost 10,50.16 13,92.22

Directors’ sitting fee 16.10 13.10

Insurance 1,01.21 1,07.78

Repairs

– Buildings 59.15 59.31

– Others 7,69.43 8,46.99

Donations 2,98.10 2,22.25

Miscellaneous expenses 7,31.13 13,05.85

60,42.27 71,60.91

18 Provisions and Write off

Bad Debts 34,54.60 21,38.25

Loss on Assets sold/written off 13,67.68 8,31.80

Provision against non-performing assets (net) 4,79.98 15,46.33

Loss on sale of investments – 2.15

Provision against Investments 1,44.64 98.27

54,46.90 46,16.80

(Rs. in Lakhs)

2009-10 2008-09


34

19. NOTES TO THE ACCOUNTS

1 SIGNIFICANT ACCOUNTING POLICIES

1.1 The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting

and comply with the provisions of the Companies Act, 1956. Besides, the Company follows the directions prescribed by the

Reserve Bank of India (RBI) for Non Banking Financial Companies.

The preparation of the financial statements in conformity with generally accepted accounting principles requires the use of

estimates and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported amounts

of revenues and expenses during the year and disclosure of contingent liabilities as at that date. The estimates and assumptions

used in these financial statements are based upon the management’s evaluation of the relevant facts and circumstances as of

the date of the financial statements.

1.2 Income recognition:

a) Income from Hypothecation Loans and Hire Purchase transactions is accounted on the basis of the Internal Rate of Return

method.

b) Lease income is accounted as per the terms of the lease agreements for contracts entered into upto 31st March 2001.

Income from leases entered into on or after 1st April, 2001 is accounted as per Accounting Standard – AS 19 – Leases.

c) Income from Services is recognised on accrual basis.

1.3 Financial Instruments

Financial instruments such as commercial paper, zero coupon non convertible debentures etc., issued at a discount to the face

value are accounted at their carrying cost, comprising issue price and accrued finance cost.

1.4 Fixed Assets and Depreciation / Amortisation:

Fixed Assets are stated at historical cost less accumulated depreciation.

Depreciation on assets is provided on the Written Down Value method at rates prescribed in Schedule XIV to the Companies

Act, 1956. Assets costing Rs.5000 or less acquired during the year are fully depreciated.

Cost of assets given on lease is amortised during the lease period for all leased assets acquired prior to 01-04-2001, as

recommended in the “Guidance Note on Accounting for Leases (Revised)”. Lease Equalisation Account, which represents

the excess/shortfall of annual lease charge when compared with statutory depreciation, is recognised. The value of assets on

Finance Lease is further adjusted for balance in Lease Adjustment Account.

1.5 Valuation of Investments:

Long-term investments are stated at cost and provision for diminution in value, other than temporary, is considered wherever

necessary.

Current investments are valued at lower of cost and market value/net asset value.

1.6 Foreign Currency Transactions:

Transactions in foreign currencies are accounted at the prevailing rates of exchange on the date(s) of the transaction.

Monetary items denominated in foreign currencies are restated at the prevailing rates of exchange at the Balance Sheet date.

Gain or loss arising out of fluctuations in exchange rates are accounted for in the Profit and Loss Account.

Exchange differences on forward exchange contracts, entered into for hedging foreign exchange fluctuation risk in respect

of asset/liability are recognised in the Profit and Loss Account in the reporting period in which the exchange rate changes.

Premium on forward exchange contracts is expensed over the tenure of the contract.

Interest accrued on secured / unsecured foreign currency loans which are covered by forward contracts, has been provided

at the forward exchange contract rate and on loans not so covered at the exchange rate prevailing at the year-end.

SCHEDULES


1.7 Employee Benefits:

A) Short Term Employee Benefits: Short Term Employee Benefits for services rendered by employees are recognized during the period when the services are

rendered.

B) Post employment benefits: Defined Contribution Plan i) Provident Fund

Contributions are made to the company’s Employees Provident Fund Trust in accordance with the fund rules. The interest

rate payable by the trust to the beneficiaries every year is notified by the Government. The Company has an obligation to

make good the shortfall, if any, between the return from the investment of the trust and the notified interest rate.

The Company also contributes to a government administered Employees Pension Scheme under the Employees Provident

Fund Act and to Employees’ State Insurance Schemes on behalf of its employees.

ii) Superannuation

The Company makes fixed contributions as a percentage on salary to the superannuation fund, which is administered by

trustees and managed by the Life Insurance Corporation of India (LIC).

The above contributions are charged to the Profit and Loss Account.

Defined Benefit Plan

i) Gratuity

The Company makes an annual contribution to a Gratuity Fund administered by trustees and managed by LIC and SBI Life

Insurance Company Limited (SBI Life). The Company accounts its liability based on an actuarial valuation, as at the balance

sheet date, determined every year by LIC and SBI Life using the Projected Unit Credit method.

ii) Leave Encashment

The Company contributes to a staff leave encashment scheme managed by SBI Life. The Company accounts its liability based

on an actuarial valuation, as at the balance sheet date, determined every year, using the Projected Unit Credit method.

The expenses and actuarial gain/ loss on account of the above benefit plans are recognised in the profit and loss account

on the basis of an actuarial valuation.

C) Other Long Term Employee Benefits: The estimated liability in respect of other long term benefits like Employee Assured Bonus Scheme, reimbursement of

medical expenses and entitlement of sick leave has been provided on the basis of actuarial valuation.

D) Employee Stock Options: The Company determines the compensation cost based on the intrinsic value method. The compensation cost is amortised

on a straight line basis over the vesting period.

1.8 Taxation:

Current tax is provided on the taxable income for the year.

Deferred tax liabilities arising from timing differences have been fully provided for. Deferred tax assets are recognised on the

consideration of prudence.

1.9 Intangible Assets:

Items of Computer software acquired / developed are recorded as intangible assets and their cost is amortised over their

expected useful life.

SCHEDULES19. NOTES TO THE ACCOUNTS (Contd.)


36


1.10 Impairment of Assets:

The carrying amounts of assets are reviewed at each balance sheet date to ascertain impairment based on internal / external

factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable

amount is the higher of the net selling price of the assets and their value in use.

1.11 Provisions:

Provisions are recognised when the Company has present legal or constructive obligations, as a result of past events, for which

it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made

for the amount of the obligation.

2. BALANCE SHEET:

2.1 Reserves and Surplus:

A Special Reserve was created in terms of the Rupee Term Loan agreement entered into with International Finance

Corporation, Washington. Consequent to the repayment of the term loan, the balance in the Special Reserve has been

withdrawn.

2.2 Secured Loans:

a) Non convertible debentures amounting to Rs.317682.03 lakhs (31.03.2009 – Rs.233906.86 lakhs), include zero coupon

debentures of Rs.34383.03 lakhs (31.03.2009 – Rs.4306.85 lakhs). The face value of the zero coupon debentures are

Rs.38100.00 lakhs (31.03.2009- Rs.4600.00 lakhs). These debentures are redeemable at par between 2010 and 2013.

The above debentures are secured by mortgage of two immovable properties ranking pari passu with the charges created

/ to be created in favour of the trustees in addition to specific assets covered by Hire Purchase / Lease agreements and a

charge on Hypothecation Loan Receivables with a security cover of 100%, as per the terms of issue. The charge in respect

of Non convertible debentures amounting to Rs.9500.00 lakhs is pending creation.

b) Loans from scheduled banks under “Secured Loans” include

(Rs in Lakhs)

31.03.2010 31.03.2009

Working Capital Demand Loans 986,11.54 888,21.26

Term Loans 1721,23.70 850,00.00

Total 2707,35.24 1738,21.26

i) Rs.98611.54 lakhs availed under working capital facilities are secured by hypothecation of assets covered by Hire

Purchase / Lease agreements and a charge on Hypothecation Loan Receivables, ranking pari passu, excluding assets

which are specifically charged to others. The facilities include foreign currency loans of Rs.Nil as on 31.03.2010

(31.03.2009 - Rs.4588.18 lakhs).

ii) Rs.172123.70 lakhs availed as Term Loans are secured by hypothecation of specific assets covered by Hire Purchase /

Lease agreements and a charge on Hypothecation Loan Receivables. The charge in respect of Term Loan amounting

to Rs.5000.00 lakhs is pending creation.

2.3 Unsecured Loans:

a) Non convertible debentures amounting to Rs.33500 lakhs (31.03.2009 - Rs.57800 lakhs) are partly secured by mortgage

of an immovable property, ranking pari passu, with the charge created / to be created in favour of the debenture trustees.

These debentures are redeemable at par during 2010.



b) During the year, the Company raised Rs.19500 lakhs (31.03.2009 – Nil) by the issue of long term unsecured redeemable

non convertible subordinated debentures. As on 31st March, 2010 the Company’s outstanding subordinated debentures

were Rs.24500 lakhs (31.03.2009 – Rs.5000 lakhs). These debentures are redeemable at par between 2012 and 2017.

The debentures are subordinated to the existing and future unsecured borrowings of the Company and qualify as Tier II

Capital under the Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)

Directions, 2007.

c) Short Term Loans and Advances:

The maximum amount of face value of the commercial paper outstanding at any time during the year was Rs.150000 lakhs

(2008-09 – Rs.118500 lakhs). The face value of the commercial paper outstanding as of 31.03.2010 was Rs.63500.00

lakhs (31.03.2009- Rs.49000.00 lakhs)

2.4 Derivative Contracts:

Derivative contracts outstanding as on 31.03.2010 for Interest Rate Swaps is Rs.12500 lakhs (31.03.2009 – Rs.61800 lakhs)

for hedging against floating interest rates.

2.5 Fixed Assets:

a) Buildings on leasehold land include Rs. 1093.97 lakhs (31.03.2009 – Rs.1093.97 lakhs) being the cost of ownership flats

in co-operative societies / associations.

b) Land and Buildings include Rs.1086.80 lakhs representing undivided share of land (31.03.2009-Rs.1086.80 lakhs).

c) Plant and Machinery and Vehicles include assets costing Rs. 20047.67 lakhs (gross block) on operating lease contracts

(31.03.2009 – Rs.15087.71 lakhs).

d) Intangible Assets:

In accordance with Accounting Standard – AS 26 – Intangible Assets, software purchased / developed amounting to

Rs.447.66 lakhs (31.03.2009 – Rs.302.50 lakhs) is amortised based on a technical evaluation.

e) The details of assets on operating lease after 01.04.2001 are: (Rs in lakhs)

31.03.2010 31.03.2009

Plant and Vehicles Computers Plant and Vehicles Computers

Machinery Machinery

Gross carrying amount (Cost) 20,35.97 171,61.68 8,26.91 14,49.67 127,60.25 8,47.04

Accumulated Depreciation 5,18.41 61,27.63 5,42.16 3,42.77 42,21.85 4,32.65

Depreciation recognised in

Profit and Loss Account

for the Year 1,75.63 27,83.00 1,66.75 1,61.16 20,16.52 2,38.92

Maturity Pattern of the future minimum lease payments is given below: (Rs.in lakhs)

31.03.2010 31.03.2009

Less than 1 year 39,25.58 39,36.88

Later than 1 year and not later than 5 years 99,04.60 72,64.14

Total 138,30.18 112,01.02


38


2.6 Investments:

In accordance with the Reserve Bank of India directives, the Company has created a floating charge on the statutory liquid

assets comprising investment in Government Securities of face value Rs.12187.30 lakhs (Cost Rs.12249.70 lakhs) and bank

deposits of Rs.5509.70 lakhs (grouped under Schedule 9, Current Assets – Cash and Bank Balances) in favour of trustees

representing the public deposit holders of the Company.

2.7 Current Assets:

a) During the year the Company realised Rs.28304.94 lakhs (31.03.2009 – Rs. 69583.50 lakhs) on sell down of receivables.

Bank deposits of Rs.3336.00 lakhs have been given as collateral by way of credit enhancement. (31.03.2009 – Rs.10466.60

lakhs).

Cash and Bank balances - with scheduled banks in deposit accounts includes Rs.14595.20 lakhs provided as collateral

for sell down transactions for which the lien has been noted.

b) In accordance with Accounting Standard – AS 19 – Leases, the reconciliation between the total gross investment in the lease

and the present value of minimum lease payments (MLP) receivables as on 31.03.2010 and 31.03.2009 is as follows:

(Rs. in lakhs)

31.03.2010 31.03.2009

Gross Investment in lease 302,80.01 382,44.89

Less: Unearned Finance Charges 41,41.63 57,94.74

MLP Receivables 261,38.38 324,50.15

Maturity Pattern of the Gross investment in lease / Present Value of MLP receivables:

(Rs. in lakhs)

31.03.2010 31.03.2009

Gross Investment MLP Gross Investment MLP

in Lease Receivables in Lease Receivables

Less than 1 year 163,39.52 137,99.80 193,83.17 157,81.37

Later than 1 year and

not later than 5 years 139,40.49 123,38.58 188,61.72 166,68.78

Total 302,80.01 261,38.38 382,44.89 324,50.15

Accumulated provision for un-collectible minimum lease payments receivable: Rs. 657.42 lakhs.

2.8 “Secured Loans” from Scheduled Banks and Current Accounts with Scheduled Banks under “Cash and Bank Balances” are

stated after deduction / addition of cheques on hand to the extent of Rs.4480.76 lakhs (31.03.2009 - Rs.4275.95 lakhs).

2.9 Loans and advances:

a) Secured loans include Rs.18.45 lakhs (31.03.2009 - Rs.19.72 lakhs) due from a Director of the Company. Maximum

amount due at any time during the year Rs. 19.72 lakhs (2008-09 - Rs.20.89 lakhs).

b) Unsecured loans include Rs.0.18 lakhs (31.03.2009- Rs.0.39 lakhs) due from officer of the Company. Maximum amount

due at any time during the year Rs.0.24 lakhs (2008-09 - Rs.0.84 lakhs).



c) Advance income tax and tax deducted at source is net of provision for tax of Rs.35489.44 lakhs (31.03.2009 - Rs. 31194.31

lakhs) and includes Rs.2050.77 lakhs (31.03.2009 -Rs.2898.72 lakhs) towards income tax paid under dispute.

Advance Fringe Benefit tax is net of provision for Fringe Benefit tax of Rs.298.52 lakhs (31.03.2009-Rs.404.76 lakhs)

d) Advances and deposits recoverable in cash or kind or for value to be received include Rs. 213.09 lakhs (31.03.2009 -

Rs. 186.09 lakhs) towards sales tax paid under dispute in respect of which appeals are pending.

2.10 Current liabilities:

a) Sundry creditors for expenses include Rs.182.00 lakhs (31.03.2009 - Rs. 125.50 lakhs) payable to directors.

b) Interest accrued but not due includes Rs.106.64 lakhs on deposits of Directors (31.03.2009 – Rs.43.63 lakhs).

3. PROFIT AND LOSS ACCOUNT

3.1 Income from operations:

a) Hypothecation Loans / Hire Purchase is net of business origination cost of Rs.2641.09 lakhs (Previous Year – Rs.2047.86

lakhs).

b) Lease is net of depreciation of Rs.98.66 lakhs (Previous Year Rs.160.10 lakhs) and Lease Equalisation Account

Rs.(91.85) lakhs (Previous Year – Rs.55.77 lakhs).

3.2 Income from operations - Investments comprise:

(Rs.in lakhs)

2009 - 10 2008 -09

i) Interest 34,08.99 32,69.67

ii) Profit on sale of investments:

Long Term 3,12.97 24,85.08

Current 1,59.37 8,15.84

3.3 Income from Services includes Trading of Computer Accessories and Software:

The details relating to trading items are as under: (Rs.in lakhs)

2009-10 2008-09

Sales 9.11 14.03

Purchases 9.02 10.97

The revenue from sale of computer accessories and software and their individual related costs constitute less than 10% of the

total turnover of the Company. Therefore, quantitative information relating to this business has not been stated.

3.4 Profit on sale of shares:

Profit on sale of shares is on the sale of 11,60,066 equity shares of face value of Rs.5 each – WABCO - TVS (India) Ltd. pursuant

to an agreement.

3.5 Financial Expenses:

Interest – Fixed loans includes interest on fixed/cumulative deposits amounting to Rs.75.98 lakhs (Previous Year - Rs.54.76

lakhs) paid / credited to Directors.


40


3.6 Employee Benefits:

Defined Contribution Plan:

During the year, the Company has recognised the following amounts in the Profit and Loss account, which are included in

Establishment Expenses in Schedule 16:

(Rs. in lakhs)

2009-10 2008-09 2007-08

Contribution to Provident Fund 1,41.89 1,37.50 1,23.63

Contribution to Pension fund 1,53.31 1,60.42 1,54.84

Contribution to Employees’ State Insurance 6.13 11.80 25.27

Contribution to Superannuation fund 99.15 1,00.00 87.32

(Rs. in lakhs)

Description of Benefits Plan

2009-2010 2008-2009

Funded Gratuity

A) Reconciliation of opening and closing balances of the

present value of the defined benefit obligation

Opening Balance : Present value of obligation 9,02.15 7,77.11

Current service cost 86.95 71.44

Interest cost 70.14 60.70

Benefits paid (64.56) (73.06)

Actuarial (gain) / loss on obligations (11.17) 65.96

Closing Balance: Present value of obligation 9,83.51 9,02.15

B) Reconciliation of opening and closing balances of

the fair value of plan assets

Opening Balance :Fair value of plan assets 9,61.16 8,04.02

Expected return on plan assets 78.27 67.96

Contributions made 70.05 1,64.02

Benefits paid (64.56) (73.06)

Actuarial gain / (loss) on plan assets 5.91 (1.78)

Closing Balance : Fair value of plan assets 10,50.83 9,61.16

C) Reconciliation of present value of defined benefit

obligation and fair value of plan assets to the assets

and liabilities recognised in the Balance sheet

Closing Balance: Present value of obligation 9,83.51 9,02.15

Closing Balance: Fair value of plan assets 10,50.83 9,61.16

Unrecognised past service cost – –

Net Asset / (Liability) recognised in Balance Sheet 67.32 59.01

(included under Loans & Advances in Schedule 10)


D) Expenses recognised in the Profit and Loss account

Current service cost 86.95 71.44

Interest cost 70.14 60.70

Expected return on plan assets (78.27) (67.96)

Net actuarial (gain) / loss recognised (17.08) 67.74

Total Expenses 61.74 1,31.92

(included under Establishment

expenses in Schedule 16)

E) Actual return on plan assets

Expected return on plan assets 78.27 67.96

Actuarial gain / (loss) on plan assets 5.91 (1.78)

Actual return on plan assets 84.18 66.18

F) Actuarial assumptions *

Discount rate 8% 8%

Expected rate of return on plan assets 8% 8%

Rate of increase in compensation levels 6% 6%

* The estimates of future salary increases, considered in actuarial valuation, takes account of inflation,

seniority, promotion and other relevant factors like supply and demand in the employment market.

Amount for the current and previous two years are as follows: (Rs.In Lakhs)

Particulars 2009-10 2008-09 2007-08

Defined Benefit Obligation 9,83.51 9,02.15 777.11

Plan Assets 10,50.83 9,61.16 804.02

Suprlus / (deficit) 67.32 59.01 26.91

Experience adjustments on plan liabilities 11.17 (65.96) (133.88)

Experience adjustments on plan Assets 5.91 (1.78) (3.52)

The present value of obligation towards compensated absences, as per actuarial certificate, as on 31.03.2010 was Rs. 440.97

lakhs (31.03.2009 – Rs. 371.63 lakhs) and is provided for in the books of accounts.

Other Long Term Benefits

The Company’s liability towards other long term benefits are given below: (Rs.in lakhs)

2009-10 2008-09 2007-08

• Employeeassuredbonusscheme 12,03.30 6,57.06 1,81.73

• StaffMedicalScheme 78.60 78.98 96.99

• RetiredEmployeeMedicalScheme 1,32.53 1,43.04 1,47.64


Description of Benefits Plan

2009-2010 2008-2009

Funded Gratuity


42

SCHEDULES

19. NOTES TO THE ACCOUNTS (Contd.)

3.7 Sundaram Finance Employee Stock Option Scheme (SFESOS)

a) The Directors have approved an issue 10500 Stock Option at an exercise price of Rs.10/- per share in a manner provided

in the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999

Particulars

Options Granted 10500

Exercise Price Rs.10/- Per Share

Grant Date 29/05/2009

Vesting Date 31/05/2010

Vesting Period 12 months

Exercise Period 01/06/2010 –31/08/2010

Market Price on Grant Date 276.10

Intrinsic Value 266.10

Total Expenses recognised for 2009-10 (Rs. In Lakhs) 23.28

(Included in Establishment Expenses in Schedule 16)

b) The Company has followed Intrinsic Value for accounting SFESOS and had compensation cost for the stock options granted

under the Scheme been determined based on fair value approach, the Company’s Profit after Tax and Earnings Per Share

would have been as per the amounts indicated below:

2009-10

(Rs. In Lakhs)

Profit afer tax (as reported) 226,74.86

Add: SFESOS compensation expense included in net profit 23.28

Less: SFESOS compensation expense determined under 23.32

fair value based method

Profit after Tax (adjusted) 226,74.82

Basic Earnings per Share of Rs.10 each (as reported) (Rs.) 40.8174

Basic Earnings per Share of Rs.10 each (adjusted) (Rs.) 40.8173

c) The key assumptions used for calculating fair value as on the date of the grant are:

Date of Grant 29/05/2009

Risk Free Interest Rate 4.13%

Exercise Price (Rs.) 10/-

Expected Life of the Option 368 Days

Expected Volatility 55.92%

Dividend Yield No dividend rights during vesting period.

Price of the underlying share in market at the time of the Option grant (Rs.) 276.10

Fair Value of the Option (Rs.) 266.51

(Computed using Black Scholes Model)


3.8 Remuneration to Directors: (Rs. in lakhs)

2009-10 2008-09

i) Salary 49.80 46.80

ii) Commission

– Wholetime Directors 1,50.00 1,00.00

– Non Wholetime Directors 32.00 25.50

iii) Sitting fees to Wholetime Directors 2.90 2.60

iv) Contribution to Provident, Superannuation and Gratuity Funds 16.16 14.80

v) Other Allowances and Perquisites 39.28 34.42

Total 2,90.14 2,24.12

3.9 Computation of net profit for calculation of commission to directors: (Rs.in lakhs)

Net Profit 226,74.86

Add: Directors’ Remuneration 2,90.14

Directors’ Sitting Fee (other than Wholetime Directors) 13.20

Depreciation as per books 45,80.23

Provision of Taxation (including Wealth Tax) 96,72.77

Provision for Non Performing Assets 4,79.98

General Provision on Standard Assets 31,61.69

Provision for Investments 1,44.64

183,42.65

Less: 410,17.51

Depreciation as per Sec.350 of the Companies Act, 1956 45,80.23

Profit on Sale of Investments 53,36.95

Lease Equalisation Account 91.85

100,09.03

Net profit as per Section 198 of the Companies Act, 1956 310,08.48

1% thereof 3,10.08

Commission to Managing Director and Deputy Managing Director 1,50.00

Commission to Non-Wholetime Directors 32.00

3.10 Miscellaneous expenses under “Administrative and other expenses” includes remuneration towards: (Rs. in lakhs)

2009-10 2008-09

Statutory Audit 27.00 22.50

Tax Audit 9.00 7.50

Certification 19.59 17.17

Service Tax 5.73 5.75

Travelling Expenses 4.32 2.47



44

3.11 A general provision of Rs.3161.69 lakhs (Previous Year – NIL) has been made during the year @ 0.40% of the standard assets.

3.12 Provisions and Write offs: Loss on sale of investments comprises Rs.NIL lakhs (Previous Year – Rs.2.15 lakhs) pertaining to current investments.

3.13 Exchange difference amounting to Rs.2.88 lakhs (net loss) (Previous Year - Rs.4.24 lakhs-net gain) arising on account of foreign currency transactions has been accounted in the Profit and Loss account in Accordance with Accounting Standard – AS 11 – Accounting for the effects of changes in foreign exchange rates.

4. GENERAL

4.1 Segment Reporting Segment information is presented in the Consolidated Financial Statements in terms of the Accounting Standard – AS 17 –

Segment Reporting.

4.2 Related Parties Disclosures:

4.2.1 Related party disclosures, as stipulated by Accounting Standard – AS 18 – Related Party Disclosures, are given below:

Related Parties: Subsidiary Companies: Sundaram Finance Distribution Ltd. Sundaram BNP Paribas Home Finance Ltd. Sundaram BNP Paribas Asset Management Co. Ltd. Sundaram BNP Paribas Trustee Co. Ltd. LGF Services Ltd. Infreight Logistics Solutions Ltd. Sundaram Infotech Solutions Ltd. Sundaram Business Services Ltd. Professional Management Consultants Ltd. Sundaram BNP Paribas Fund Services Ltd. Key Management Personnel: Mr. T. T. Srinivasaraghavan, Managing Director Mr. Srinivas Acharya, Deputy Managing Director

Relatives of Key Management Personnel: Mr. T. T. Srinivasaraghavan Mr. T. T. Rangaswamy Father Mrs. Vimala Rangaswamy Mother Mrs. Bagyam Raghavan Wife Miss. Anjana Raghavan Daughter Master T. T. Venkatraghavan Son Mr. T. T. Narendran Brother

Mr. Srinivas Acharya Mrs. Revathi Srinivas Wife Mr. Vishal Srinivas Son Mrs. Radha Venkatesh Sister

SCHEDULES


Associates:Axles India Ltd.Turbo Energy Ltd.Transenergy Ltd.Sundaram Dynacast Pvt. Ltd.Sundaram BNP Paribas Mutual FundSundaram Medical FoundationSundaram Hydraulics Ltd.The Dunes Oman LLC (FZC)

Joint Venture:Royal Sundaram Alliance Insurance Co. Ltd.Gulf Outsourcing Services Ltd.BNP Paribas Sundaram Global Securities Operations Pvt. Ltd.


SCHEDULES


INCOME

Income from Services rendered

Sundaram BNP Paribas Home Finance Ltd. 5,48.94 5,48.94 6,00.12

Royal Sundaram Alliance Insurance Co. Ltd. 6,48.04 6,48.04 7,22.26

Sundaram BNP Paribas Mutual Fund 2,25.09 2,25.09 1,75.32

Others 15.34 58.00 73.34 1,32.16

Total 5,64.28 9,31.13 14,95.41 16,29.86

Dividend

Sundaram BNP Paribas Home Finance Ltd. 8,03.12 8,03.12

Turbo Energy Ltd. 5,76.00 5,76.00 1,34.40

Others 2,15.26 14.32 2,29.58 8,71.80

Total 10,18.38 5,90.32 16,08.70 10,06.20

Rent Receipts


Sundaram Business Services Ltd. 4,25.21 4,25.21 3,20.67

Others 1,48.14 14.05 1,62.19 2,38.75

Total 5,73.35 2,37.21 8,10.56 8,52.18

Interest

Sundaram Infotech Solutions Ltd. 1,31.13 1,31.13 1,02.47

Sundaram Business Services Ltd. 93.53 93.53 50.60

Infreight Logistics Solutions Ltd. 71.93 71.93 30.88

Others 53.22 1.13 54.35 1.23

Total 2,96.59 53.22 1.13 3,50.94 1,85.18

Income from Lease

Turbo Energy Ltd. 70.72 70.72 52.47

Others 25.05 9.03 34.08 20.70

Total 25.05 79.75 1,04.80 73.17

Income from Bill Discounting

Axles India Ltd. 1,12.86 1,12.86 46.52

Other Income 33.10 57.95 91.05 69.16

4.2.2 RELATED PARTY TRANSACTIONS FOR THE YEAR ENDED 31ST MARCH 2010

The nature and volume of transactions of the Company during the year, with the above related parties are as follows. (Rs in Lakhs)

Nature of Transactions Subsidiary Associates / Key Relatives Total Previous Companies Joint Management of Key April 2009 - Year Venture Personnel Management March 2010 2008-09 Personnel


46

SCHEDULES


EXPENSE

Interest


Sundaram BNP Paribas Mutual Fund 44.73 44.73

Others 5.03 9.14 16.90 31.07 11.37

Total 5.03 2,86.03 9.14 16.90 3,17.10 2,04.69

Professional Charges

Sundaram Business Services Ltd. 34.43 34.43

Professional Management Consultants Ltd. 11.24 11.24

Others 1,65.45

Total 45.67 45.67 1,65.45

Remuneration 2,58.14 2,58.14 1,98.62

Dividend 8.99 40.12 49.11 66.26

Donation

Sundaram Medical Foundation 2,00.00 2,00.00 1,00.00

Insurance Premium

Royal Sundaram Alliance Insurance Co. Ltd. 54.35 54.35 39.50

Rent Paid

Sundaram BNP Paribas Home Finance Ltd. 5.70 5.70 5.29


Total 5.70 1.59 7.29 8.43

Other Expenses 2.50 2.50 2.65

Nature of Transactions Subsidiary Associates / Key Relatives Total Previous Companies Joint Management of Key April 2009 - Year Venture Personnel Management March 2010 2008-09 Personnel


SCHEDULES


ASSETS

Investment in Equity Shares

Royal Sundaram Alliance Insurance Co. Ltd. 20,64.00

Sundaram Business Services Ltd. 6,50.00

Axles India Ltd. 7,46.71

Sundaram BNP Paribas Fund Services Ltd. 15,15.00 15,15.00

BNP Paribas Sundaram Global Sec. Op. Pvt. Ltd. 3,18.50 3,18.50

The Dunes Oman LLC (FZC) 4,32.19 4,32.19

Total 15,15.00 7,50.69 22,65.69 34,60.71

Intercorporate Loans disbursed to:


Infreight Logistics Solutions Ltd. 4,00.00 4,00.00 3,50.00



Others 15.00 15.00 7,45.00

Total 7,65.00 8,00.00 15,65.00 28,45.00

Repayment of Intercorporate Loan by:

Sundaram Business Services Ltd. 17,50.00 17,50.00


Others 2,24.94 2,24.94 2,18.75

Total 19,74.94 3,00.00 22,74.94 2,18.75

Investment in Trust Securities


Disinvestment in Trust Securities


Sale of Fixed Assets

Infreight Logistics Solutions Ltd. 0.15

Sale of Software Licenses


Purchase of Fixed Assets

Sundaram Infotech Solutions Ltd. 0.09 0.09

Others 10.85

Total 0.09 0.09 10.85

(Rs in Lakhs)

Nature of Transactions Subsidiary Associates / Key Relatives 31.03.2010 31.03.2009 Companies Joint Management of Key Venture Personnel Management Personnel


48

SCHEDULES



Purchase of Software & Licenses

Sundaram Infotech Solutions Ltd. 67.37 67.37 61.95

Software Development Costs

Sundaram Infotech Solutions Ltd. 2,58.24 2,58.24

Advance towards Software & Licenses

Sundaram Infotech Solutions Ltd. 3,70.05 3,70.05 10.19

Insurance Premium paid in advance


Assets-Outstanding Balances as on 31.03.2010 Preference Shares Holdings

Axles India Ltd. 6,00.00 6,00.00 6,00.00

Equity Holdings

Sundaram BNP Paribas Home Finance Ltd. 61,39.10 61,39.10 61,39.10


Others 51,38.55 46,68.94 98,07.49 49,74.66

Total 112,77.65 151,93.27 264,70.92 216,38.09

Intercorporate Loans

Sundaram Infotech Solutions Ltd. 12,50.00 12,50.00 14,59.94


Infreight Logistics Solutions Ltd. 7,50.00 7,50.00 3,50.00


Total 23,50.00 5,00.00 28,50.00 35,59.94

Trust Securities


Future Lease Receivables

Turbo Energy Ltd. 1,56.46 1,56.46 1,29.61

Sundaram BNP Paribas Asset Management Co. Ltd. 42.31 42.31 51.59

Axles India Ltd. 63.20 63.20 29.53

Others 40.21 3.39 43.60 54.82

Total 82.52 2,23.05 3,05.57 2,65.55

Future Receivables under Hire Purchase

Infreight Logistics Solutions Ltd. 1.13 1.13 7.80

Fleet Card Balance Receivable 0.02 0.02 38.54

Bills purchased 14,19.99

Other Assets 74.50 1,77.03 18.45 2,69.98 1,91.77


SCHEDULES


LIABILITIES

Issue of Non Convertible Debentures


Redemption of Non Convertible Debentures

Royal Sundaram Alliance Insurance Co. Ltd. 10,00.00 10,00.00

Intercorporate deposit

Sundaram Finance Distribution Ltd. 1,60.00 1,60.00


Total 2,35.00 2,35.00

Intercorporate deposit redeemed

Sundaram Finance Distribution Ltd. 55.00 55.00

Issue of Bonus Shares 28.80

Liabilities-Outstanding Balances as on 31.03.2010

Professional Fees 1,65.45

Equity Holdings 10.57 47.15 57.72 57.88

Deposits 49.72 1,62.14 2,11.86 2,20.33

Interest on Deposits 9.43 14.19 23.62 9.99

Non Convertible Debentures


Intercorporate Deposit

Sundaram Finance Distribution Ltd. 1,05.00 1,05.00


Total 1,80.00 1,80.00

Other Liabilities 74.58 2,63.75 3,38.33 1,02.01

No amount has been written off/written back during the year

(Rs in Lakhs)



50

SCHEDULES


4.3 In compliance with the Accounting Standard relating to ‘Financial Reporting of Interests in Joint Ventures’(AS 27), the Company

has interests in the following jointly controlled entities: (Rs.in lakhs)

Name of Companies Percentage Amount based on the Audited Accounts for the year

of Share ended 31st March 2010

Holding Assets Liabilities Income Expenditure Capital Commitment

and

Contingent Liability

Royal Sundaram Alliance 49.90 621,64.57 495,00.56 403,15.59 387,70.13 42,61.24

Insurance Company Limited (49.90) (500,38.94) (389,20.38) (336,36.25) (333,53.66) (4,37.59)

Gulf Outsourcing Services 40.00 23.84 1.48 Nil 0.14 Nil

Limited (40.00) (23.87) (1.36) (Nil) (0.34) (Nil)

BNP Paribas Sundaram 49.00 14,99.02 9,22.94 20,04.35 17,86.91 2,46.37

Global Securities

Operations Pvt. Ltd. *

Figures in brackets relates to Previous Year.

* BNP Paribas Global Securities Operations Private Limited was incorporated on 25th September 2008 and became a Joint

Venture on 03rd December 2008. The financial statements have been drawn for the period from 25th September 2008

to 31st March 2010.

4.4 Earnings per Share (Basic and diluted) 2009-10 2008-09

A Profit for the year after taxation (Rs in lakhs) 226,74.86 150,73.14

B Number of equity shares 5,55,51,930 5,55,51,930

C Basic and diluted earnings per share (in Rs.) 40.82 27.13

4.5 The Writ Petition challenging the levy of Service Tax on Hire Purchase and Leasing w.e.f. 16.07.2001 filed before Madras High

Court by the Trade Associations had been dismissed. S.L.P against the High Court Order filed by the Trade Associations has

been admitted and notice ordered without stay. Till date no service tax has been remitted.

4.6 The Commissioner of Customs, Tuticorin raised a demand of Rs. 500 lakhs towards penalty on the Company and Rs. 1824 lakhs

(towards duty) on the Company jointly and severally with the Lessee, in respect of a Lease transaction. The Appellate Authority

admitted the appeal preferred by the Company and granted stay against the recovery proceedings.

The Special Director of Enforcement, New Delhi, imposed a penalty of Rs. 10 lakhs on the Company. The Company has preferred

an appeal against the penalty with the Appellate Tribunal for Foreign Exchange and obtained a stay after remitting Rs. 2.50 lakhs

as directed by the Tribunal. Meanwhile the Company initiated arbitration proceedings against the Lessee and has received an

award in its favour.

4.7 Securities and Exchange Board of India has alleged violation of Regulation 13(6) of SEBI (Prohibition of Insider Trading)

Regulations, 1992 and imposed a penalty of Rs.10 lakhs on the Company vide its Order dated 31st March 2010. The Company

has preferred an appeal against the said Order before Securities Appellate Tribunal which has since been admitted.

4.8 Estimated amount of contracts remaining to be executed on capital account – Rs.2225.15 lakhs (net of advance of Rs.448.68

lakhs). (31.03.2009 – Rs.1028.07 lakhs - net of advance of Rs.312.48 lakhs).


SCHEDULES


4.9 There are no amounts due to Small Scale Industries in terms of “The Micro, Small and Medium Enterprises Development

Act, 2006”.

4.10 Contingent liabilities in respect of (Rs. in lakhs)

As at As at

31.03.2010 31.03.2009

a) Liability:

To Banks – on Cheques discounted 40,15.98 18,62.19

– on Counter Guarantee 35.37 27.87

– on Letter of Credit 9,12.49 –

To Sales Tax Authorities 10.32 30.97

b) Claims against the Company not acknowledged as Debts:

Hire Purchase transactions and termination of Lease transactions –

Appeals filed by the company 31.07 46.07

Others 19,94.41 13,26.28

4.11 CIF value of imports: (Rs in lakhs)

2009-10 2008-09

Capital goods (on payment basis) 6,32.47 32.68

4.12 Expenditure in foreign currency (on payment basis): (Rs in lakhs)

2009-10 2008-09

Interest 1,10.08 5,91.15

On Other Matters 34.96 1,09.85

(Rs in lakhs)

2009-10 2008-09

4.13 Earnings in Foreign Currency 94.78 3,03.56

4.14 Previous Year’s figures have been regrouped / reclassified wherever necessary to conform to current year’s classification.

Signatures to Schedules 1 to 19





52

SCHEDULE(as required in terms of Paragraph 9BB of NBFC Prudential Norms (Reserve Bank) Directions, 1998)

(Rs. in Lakhs)

Particulars Amount Outstanding Assets side: (3) Break-up of Loans and Advances including bills receivables

(other than those included in (4) below):

a Secured 857,14.22

b Unsecured (including Advance for Business Assets) 190,63.47

(4) Break-up of Leased Assets and Stock on hire and

hypothecation loans counting towards EL / HP activities :

(i) Lease assets including lease rentals under sundry debtors

a Financial Lease 1,12.42

b Operating Lease 123,92.01

(ii) Net Stock on hire including hire charges under sundry debtors

a Assets on hire 252,69.19

b Repossessed Assets 8.20

(iii) Hypothecation loans counting towards EL / HP activities

a Loans where assets have been repossessed 10,68.15

b Loans other than (a) above 6695,64.92

(Rs. in Lakhs)

Particulars Amount Amount Outstanding Overdue

Liabilities side: (1) Loans and advances availed by the NBFCs @

a Debentures : Secured 3176,82.03 –

: Unsecured 580,00.00 –

(other than falling within the meaning of public deposits)

b Deferred Credits – –

c Term Loans 1721,23.70 –

d Inter-corporate loans and borrowings – –

e Commercial paper 621,28.15 –

f Public Deposits 1085,81.16 9,00.93 #

g Other loans

- Bank Borrowing 1288,49.35 –

- Deposits from Corporates 20,13.75 –

(2) Break-up of 1 (f) above (Outstanding public deposits) @

a In the form of Unsecured debentures – –

b In the form of partly secured debentures i.e. debentures where – –

there is a shortfall in the value of security

c Other public deposits 1085,81.16 9,00.93 #

@ Interest accrued but not paid - Nil

# Represents unclaimed deposits


(Rs. in Lakhs)

Particulars Amount Market Outstanding Value * (5) Break-up of Investments: Current Investments: 1. Quoted: – – 2. Unquoted: (i) Units of mutual funds 101,24.60 106,97.86 Long Term Investments: 1. Quoted: (i) Equity Shares 32,27.29 118,98.72 (ii) Debentures and Bonds 1,30.05 1,30.05 (iii) Government Securities 122,49.70 117,56.95 2. Unquoted: (i) Shares a Equity 271,96.56 510,41.59 b Preference 6,00.00 6,00.00 (ii) Government Securities – – (iii) Units of mutual funds 1,66.60 1,66.60 (iv) Bonds 50.00 50.00 (v) Others – – Total 537,44.80 863,41.77 * Unquoted Investments disclosed at break up / fair value / NAV

(Rs. in Lakhs) (8) Other Information Particulars Amount (i) Gross Non-Performing Assets a Related Parties 7,50.00 b Other than related parties 93,03.75 (ii) Net Non-Performing Assets a Related Parties – b Other than related parties 35,83.63 (iii) Assets acquired in satisfaction of debt (during the year) Nil

(6) Borrower group-wise classification of all leased assets, stock-on-hire and loans and advances: (Rs. in Lakhs) Category Amount net of provisions Secured Unsecured Total 1. Related Parties** a Subsidiaries 83.65 16,69.65 17,53.30 b Companies in the same group – – – c Other related parties 2,23.05 – 2,23.05 2. Other than related parties 7882,10.09 165,36.02 8047,46.11

Total 7885,16.79 182,05.67 8067,22.46

(7) Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted):

Market Value / Book Value Category Break up or fair (Net of value or NAV Provisions) 1. Related Parties** a Subsidiaries 166,87.65 108,36.65 b Companies in the same group – – c Other related parties 294,89.04 170,83.65 2. Other than related parties 401,65.08 256,82.83 Total 863,41.77 536,03.13

(Rs. in Lakhs)

** As per Accounting Standard


54

I Registration Details

Registration No. 0 2 4 2 9 State Code 1 8

Balance Sheet Date 3 1 0 3 2 0 1 0

Date Month Year

II Capital Raised during the Year (Amount in Rs. Thousands)

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement N I L N I L

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

1 0 4 8 3 6 9 5 7 1 0 4 8 3 6 9 5 7

Sources of Funds Paid up Capital Reserves & Surplus

5 5 5 5 1 9 1 2 6 0 5 7 1 8

Secured Loans Unsecured Loans

5 8 8 4 1 7 2 7 2 6 0 9 6 0 8 7

Applications of Funds Net Fixed Assets Investments

2 3 2 3 7 8 0 5 3 7 4 4 8 0

Deferred Tax Asset (net) Net Current Assets

5 5 3 3 6 5 8 9 8 4 9 7 5 4

Misc. Expenditure Accumulated Loss

N I L N I L

IV Performance of Company (Amount in Rs. Thousands)

Turnover Total Expenditure

1 2 4 8 7 0 8 4 9 2 5 2 3 2 1

+ – Profit / (Loss) Before Tax + – Profit / (Loss) After Tax

3 3 2 3 4 7 6 3 3 2 2 6 7 4 8 6

(Please tick appropriate box + for profit, – for loss)

Earnings Per Share Rs. Ps. Dividend Rate %

4 0 . 8 2 1 0 0

V Generic Names of Three Principal Products / Services of Company (As per monetary terms)

Item Code No. (ITC Code) Not Applicable

Product / Service Description H I R E P U R C H A S E

L E A S I N G

H Y P O T H E C A T I O N L O A N

Balance Sheet Abstract and Company’s General Business ProfileInformation as required under Part IV of the Schedule VI of the Companies Act, 1956


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56

A) CASH FLOW FROM OPERATING ACTIVITIES Net Profit 226,74.86 150,73.14 Add: Lease Equalisation Account (91.85) 55.77 Provision for Taxation (Including Wealth Tax) 96,72.77 68,97.89 322,55.78 220,26.80 Add: Financial Expenses 633,79.55 956,35.33 645,44.09 865,70.89 Depreciation 45,80.23 39,36.21 Provision against Investments 1,44.64 98.27 Provision against Non - Performing assets 4,79.98 15,46.33 General Provisions on Standard Assets 31,61.69 – Employee Stock Option Compensation Expenses 23.28 – (Profit) loss on sale of assets 34.21 (58.16) (Profit) loss on sale of Investments (53,36.95) (9,73.16) Interest / Dividend Income (22,00.38) (20,82.40) Effect of Foreign Exchange rates on Cash and Cash Equivalents, net 0.18 (0.04) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 965,22.21 890,37.94 (Increase) Decrease in Net Stock on hire 67,08.38 (14,54.42) (Increase) Decrease in Leased assets - net of sales (60,87.57) (51,98.68) (Increase) Decrease in Trade Bills purchased 15,44.60 (11,31.50) (Increase) Decrease in Net Investment in Lease (32.25) 7,53.29 (Increase) Decrease in Loans and Advances (1465,04.17) (25,42.26) (Increase) Decrease in Other Receivables 13.29 (12.73) (Increase) Decrease in Bank Deposits (net) (1079,89.81) (99,36.80) (Increase) Decrease in SLR Investments - net of sales (22,40.77) (17,96.00) Increase (Decrease) in Current Liabilities 32,87.01 (2513,01.29) (66,05.83) (279,24.93) Cash generated from Operations (1547,79.08) 611,13.01 Financial Expenses (619,43.37) (609,56.92) Direct Taxes Paid (90,05.16) (709,48.53) (70,20.55) (679,77.47) NET CASH FROM OPERATING ACTIVITIES (A) (2257,27.61) (68,64.46)B) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (15,38.40) (18,41.10) Sale of Fixed Assets 96.09 1,20.30 Purchase of Investments (12677,85.28) (4004,14.50) Purchase of Investments in Subsidiaries/Joint Venture (18,33.50) (27,14.00) Sale of Investments 12746,00.34 3999,20.13 Interest Received 2.75 7,91.02 Dividend Received 21,97.65 16,53.14 NET CASH FROM INVESTING ACTIVITIES (B) 57,39.65 (24,85.01)C) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of Debentures 3475,75.18 4188,06.86 Debentures Redeemed (2686,00.00) (4151,00.00) Increase (Decrease) in Long Term Borrowings 869,13.98 (307,95.67) Increase (Decrease) in Fixed Deposits 154,84.84 183,44.21 Increase (Decrease) in Short Term Loans and Advances 417,96.83 268,55.10 Dividend paid (including Corporate Dividend Tax) (53,51.34) (73,28.43) NET CASH FROM FINANCING ACTIVITIES (C) 2178,19.49 107,82.07D) Effect of Foreign Exchange rates on Cash and Cash Equivalents, net (D) (0.18) 0.04NET INCREASE IN CASH AND CASH EQUIVALENTS (A)+(B)+(C)+(D) (21,68.65) 14,32.64CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 48,39.35 34,06.71CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 26,70.70 48,39.35COMPONENTS OF CASH AND CASH EQUIVALENTSAT THE END OF THE YEARCurrent Account with Banks 13,50.13 36,41.22 Cash, Stamps and Stamp Papers on Hand 13,20.57 11,98.13 26,70.70 48,39.35 Note:1.Cash and Cash equivalents includes balance in Unpaid Dividend account of Rs.59.27 lakhs (31.03.2009 Rs.98.11 lakhs) 2.Previous Year’s figures have been regrouped/reclassified wherever necessary to conform to current year’s classification

Cash Flow Statement(Rs. in Lakhs)

2009-10 2008-09

As per our report of even date attached S. Viji S. Ram For Brahmayya & Co., Chairman S. NarayananChartered Accountants Srinivas Acharya L. Ravi Sankar T. T. Srinivasaraghavan T. R. SeshadriPartner Managing Director S. Ravindran S. PrasadChennai, S. Venkatesan Aroon Raman28th May, 2010 CFO & Secretary Directors


Sundaram Finance Limited has been following good governance practices since inception. The strong edifice of the Company, built in 1954,

is supported by the pillars of Customer Faith, Depositor Confidence, Institutional Trust, Investor Steadfastness and Employee Loyalty. The

Company has grown over the past five decades on the foundations of dedicated customer service, fair business practices and efficient, safe

and trusted financial policies. It continues to maintain the highest standards of integrity and excellence in service to all stakeholders.

The Company follows the “Know Your Customer” (KYC) guidelines and “fair-practices code”, which lay down detailed guidelines for dealing

with customers, including an appropriate dispute resolution mechanism, towards improving transparency in operations and strengthening

Corporate Governance standards.

The Voluntary Guidelines on Corporate Governance and Corporate Social Responsibility issued by Ministry of Corporate Affairs in 2009 is

a step in the right direction to further elevate governance levels across the entire corporate sector. While the Company has already been

following most of them in substance, it will take appropriate steps to make it formal in a phased manner.

I. BOARD OF DIRECTORS

All the members of the Board are eminent persons with considerable expertise and experience in the automobile, engineering, banking,

finance, insurance, audit, accounts and transport sectors. The Company is immensely benefited by the range of experience and skills that

the Directors bring to the Board.

The composition of the Board as on 31st March 2010 is as follows:

The Chairman of the Board is Sri S. Viji, a Non Executive Promoter Director. The Executive Directors are Sri T. T. Srinivasaraghavan,

Managing Director and Sri Srinivas Acharya, Deputy Managing Director. Sri A. Rangaswami, Sri T. R. Seshadri, Sri S. Ravindran,

Sri S. Prasad and Sri Aroon Raman are the Independent Directors. While there are eight non-executive directors, fifty percent of the Board

consists of Independent Directors which is in conformity with the listing requirements.

All Directors and Senior Management Personnel have re-affirmed compliance with the Code of Conduct approved and adopted by the

Board of Directors.

II. BOARD MEETINGS

The Board of Directors formulates the business and operational policies, reviews the performance and decides on strategic issues

concerning the Company.

Report on Corporate Governance


58

During the year under review, 13 meetings of the Board of Directors were held.

27/04/2009 30/07/2009 30/10/2009 28/01/2010

29/05/2009 31/08/2009 27/11/2009 04/02/2010

26/06/2009 25/09/2009 24/12/2009 01/03/2010

26/03/2010

The details of directors’ attendance at Board Meetings, AGM and details of other directorships, committee chairmanships/memberships

held by the Directors during the year are as follows:

Name of the Director Attendance Directorships (other than Committees in which Chairman/Member Particulars Sundaram Finance Limited) (other than Sundaram Finance Limited)

Board Meeting AGM Chairman Director Chairman Member

Sri S. Viji 13 Yes 1 7 – 3

Sri S. Ram 13 No 2 7 1 3

Sri S. Narayanan 10 Yes 2 1 2 –

Sri A. Rangaswami $ 13 Yes – 1 – –

Sri T. R. Seshadri 10 Yes – – – –

Sri S. Ravindran 12 Yes – 6 – 2

Sri S. Prasad 13 Yes – 4 3 –

Sri Aroon Raman 11 Yes – – – –

Sri T. T. Srinivasaraghavan 13 Yes 1 6 3 –

Sri Srinivas Acharya # 13 Yes – 8 2 5

Note: Other Directorships exclude those in Private Limited Companies and Section 25 Companies.

$ Resigned on 01.04.2010

# Deputy Managing Director till 31.03.2010. Non-executive Director from 01.04.2010.

III. AUDIT COMMITTEE

The Audit Committee reviews the financial accounting policies, adequacy of internal control systems and systems audit and interacts with the

statutory auditors, internal auditors and systems auditors. Senior Executives and functional heads are invitees to the committee meetings.

Besides, the Committee reviews the audit plans, interim and annual financial results, management discussion and analysis of financial

condition and results of operations, related party transactions, observations of the management and internal/external auditors on internal

control and follow-up reports of the management.

During the year, the Committee met 8 times on 23rd April, 23rd May, 27th July, 21st September, 26th October, 21st December in 2009

and on 25th January and 22nd March in 2010.


Composition of the Committee and attendance of the members are as follows:

Name of the Director No. of Meetings Attended

Sri A. Rangaswami * Chairman 8

Sri S. Prasad # Member / Chairman 8

Sri S. Viji Member 7

Sri S. Ravindran Member 8

* Resigned on 01.04.2010.

# Appointed as Chairman effective 01.04.2010.

The Company Secretary is the Secretary to the Committee.

IV. REMUNERATION OF DIRECTORS

Directors of the Company are paid a sitting fee of Rs. 10,000/- each for every meeting of the Board, Audit Committee, Share Transfer and

Investor Relations Committee and Compensation Committee.

The Non-Executive Directors are remunerated by way of commission for each financial year as decided by the Board of Directors within

the ceiling of 1% of the net profits of the Company approved by the shareholders. The details of remuneration paid and number of shares

held by the Non-Executive Directors are as follows:

Name of the Director Sitting Fee Commission Number of Shares held Relationship with (Rs. in lakhs) (Rs. in lakhs) individually other Directors (as on 31.03.2010)

Sri S. Viji 2.00 5.00 6,80,446 (1) * Brother of Sri S. Ram

Sri S. Ram 1.30 3.00 2,51,494 * Brother of Sri S. Viji

Sri S. Narayanan 1.00 3.00 800 (2) –

Sri A. Rangaswami 2.30 5.00 130 –

Sri T. R. Seshadri 1.00 3.00 – –

Sri S. Ravindran 2.10 5.00 2,12,920 (3) –

Sri S. Prasad 2.30 5.00 – –

Sri Aroon Raman 1.20 3.00 2,98,948 –

Note: Number of shares held jointly with others: (1) 4342, (2) 81,712, (3) 71,360.

* 4,80,872 shares held jointly as Trustees of Sri T. S. Santhanam Testamentary Trust.

Amount of deposits placed by the Non-Executive Directors in the Company aggregated to Rs.531.24 lakhs as on March 31, 2010. The

interest on these deposits paid / credited during the year 2009-10 amounted to Rs. 60.34 lakhs.


60

The Executive Directors of the Company are appointed on contractual basis, on terms approved by the shareholders. Their remuneration

comprises salary, allowances, commission and perquisites. The quantum of commission payable to them is decided by the Board of

Directors. The remuneration is within the limits prescribed under Schedule XIII to the Companies Act, 1956.

The details of remuneration paid to the Executive Directors are as follows: (Rs. in lakhs)

Nature of Payment Sri T. T. Srinivasaraghavan Sri Srinivas Acharya

Managing Director Deputy Managing Director

Salary 28.80 21.00

Commission 100.00 50.00

Sitting Fees 1.60 1.30

Contributions to Provident, 9.35 6.81

Superannuation and Gratuity Funds

Other allowances and perquisites 22.53 16.75

Stock Options Nil 1,500 stock options were granted at Rs.10/- per

share (at par) on 29th May 2009. The said

Options would vest on 31st May 2010 and would

be exercisable between 1st June 2010 and 31st

August 2010

V. SHARE TRANSFER AND INVESTOR RELATIONS COMMITTEE

The Share Transfer and Investor Relations Committee

i) approves and monitors transfers, transmission, splits and consolidation of shares of the Company,

ii) reviews redressal of complaints from shareholders relating to transfer of shares, non-receipt of annual report, dividends etc., and

iii) reviews the compliances with various statutory and regulatory requirements.

During the year, the Committee met on 13th July and 14th December in 2009. Besides, transfers of shares were approved by resolutions

passed in circulation on 11 occasions.

Composition of the Committee and the attendance of the members are as follows:

Name of the Director No. of Meetings Attended

Sri A. Rangaswami Chairman 2

Sri S. Prasad Member / Chairman 2

Sri T. T. Srinivasaraghavan Member 2

The Share Transfer & Investor Relations Committee was re-constituted on resignation of Sri A. Rangaswami as Director by appointing

Sri S. Prasad as Chairman and Sri Srinivas Acharya as Member with effect from 01.04.2010.


Sri P. Viswanathan, Deputy Secretary, is the Compliance Officer. During the year under review, the Company received 5 communications from

shareholders, which were attended to. One investor complaint was received and resolved during the year. None was pending unresolved

as on 31st March, 2010.

VI. COMPENSATION COMMITTEE

Compensation Committee, a committee of the Board, constituted pursuant to Securities and Exchange Board of India (Employee Stock

Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, during the year 2008, met in May 2009. Sri S. Ravindran is the

Chairman and Sri Aroon Raman and Sri T. T. Srinivasaraghavan are Members of the Committee.

VII. GENERAL BODY MEETINGS

Details relating to last three Annual General Meetings:

Year Date Time Location No. of Special Resolutions Passed

2009 24/07/2009 10.25 AM The Music Academy, New No.168, Old No.306, TTK Road, Chennai 600 014 Nil

2008 24/07/2008 11.00 AM The Music Academy, New No.168, Old No.306, TTK Road, Chennai 600 014 Three

2007 25/07/2007 11.00 AM The Music Academy, New No.168, Old No.306, TTK Road, Chennai 600 014 One

No special resolution was passed through postal ballot during the year.

In May 2010, a Special Resolution under Section 314(1-B) of the Companies Act, 1956, seeking the consent of the Members for Sri Harsha

Viji, S/o. Sri S. Viji, Chairman of the Company, holding office of profit in the Company in the grade of Executive Director with effect from

01.04.2010, was passed through postal ballot, conducted by Sri T T Srinivasaraghavan, Managing Director and Sri S. Venkatesan, CFO &

Secretary, under the overall supervision of the Scrutinizer, Sri T K Bhaskar, Partner, HSB Partners, Advocates, Chennai.

Details of the voting pattern:

Date of Special Votes cast in favour Votes cast against Result

Resolution Nos. % Nos. %

14.05.2010 2,71,01,571 99.95 13,711 0.05 Passed with requisite majority

The procedure prescribed under Section 192A of the Companies Act, 1956 read with the Companies (Passing of the Resolution by Postal

Ballot) Rules, 2001, has been followed for the postal ballot conducted for special resolution mentioned above. The results of the postal

ballot was announced by Sri T. T. Srinivasaraghavan, Managing Director, at the Registered Office of the Company, posted on the website

and advertised in the newspaper.

No special resolution is proposed to be passed through postal ballot at the ensuing AGM.


62

VIII. DISCLOSURES

• TherewerenomateriallysignificantrelatedpartytransactionshavingpotentialconflictwiththeinterestsoftheCompanyatlarge.

• AllthemandatoryrequirementsspecifiedunderClause49havebeencompliedwith.

• TheCompanyhasarecordofunqualifiedfinancialstatementssinceinception.

• The Company proposes to adopt other non-mandatory requirements as well as voluntary guidelines as and when considered

necessary.

• SecuritiesandExchangeBoardofIndiahasallegedviolationofRegulation13(6)ofSEBI(ProhibitionofInsiderTrading)Regulations,

1992 and imposed a penalty of Rs.10 lakhs on the Company vide its Order dated 31st March 2010. The Company has preferred an

appeal against the said Order before Securities Appellate Tribunal which has since been admitted.

IX. MEANS OF COMMUNICATION

• Quarterly unaudited and annual audited results of the Company were published in “Business Line” (English) and “Dinamalar”

(Tamil).

• TheresultsandofficialnewsreleaseswerealsodisplayedontheCompany’swebsiteatwww.sundaramfinance.in.

• ApressmeetwasorganisedbytheCompanyon29thMay2009fordisseminationofauditedresults.

• Quarterly/annualresults,shareholdingpatternandotherdocumentshavealsobeenpublishedinElectronicDataInformationFiling

and Retrieval System (EDIFAR) as required under the Stock Exchange Listing Agreement.

X. GENERAL SHAREHOLDER INFORMATION

Annual General Meeting

Date Time Venue

15/07/2010 (Thu) 11.00 AM The Music Academy, New No.168, Old No.306, TTK Road, Chennai 600 014

• FinancialYear–1stApril2010to31stMarch2011

• BookClosuredates–3rdJuly2010to15thJuly2010(bothdaysinclusive)

• Dateofpaymentofdividends:

Interim – 22nd February 2010 onwards

Final – 16th July 2010 onwards

• Thecompany’ssharesarelistedon:

National Stock Exchange of India Limited

Exchange Plaza, 5th Floor, Plot No. C/1, G Block

Bandra-Kurla Complex, Bandra (E), Mumbai 400 051

• TheCompanyhaspaidthelistingfeesforthefinancialyear2009-10totheabovestockexchange.


• NSEStockCode:SUNDARMFIN

• ISIN:INE660A01013

• FollowingdividendsaretransferabletotheInvestorEducationandProtectionFund(IEPF)ontherespectiveduedates,asunder,

in accordance with the provisions of Section 205A (5) of the Companies Act, 1956.

Nature of Dividend Transferable to IEPF on

Consolidated Dividend 2002-03 10/09/2010

Interim Dividend 2003-04 30/05/2011


Final Dividend 2004-05 27/08/2012

Consolidated Dividend 2005-06 02/09/2013


Final Dividend 2006-07 24/08/2014


Final Dividend 2007-08 23/08/2015


Final Dividend 2008-09 23/08/2016

Reminders are sent to members for encashing unclaimed and unpaid dividends, on a regular basis. Members who have not yet preferred

a claim are, therefore, requested to contact the Registrar and Share Transfer Agents immediately.

No claim shall lie against the Fund or the Company in respect of unclaimed and unpaid dividends transferred to the IEPF as per Section

205C of the Companies Act, 1956.

MARKET PRICE DATA – AS QUOTED ON THE NATIONAL STOCK EXCHANGE

Month High Low Month High Low

Apr – 09 201.70 162.10 Oct 321.00 275.35

May 309.40 193.80 Nov 327.50 273.95

Jun 333.00 251.00 Dec 397.80 316.30

Jul 300.00 255.35 Jan – 10 408.40 333.50

Aug 320.00 280.00 Feb 379.00 332.05

Sep 340.00 296.00 Mar 389.00 350.00


64

Period

SHARE PRICE PERFORMANCE

S & P CNX Nifty

SF C

losi

ng S

hare

Pri

ce

SF Closing Share Price

S & P CNX Nifty

400.00

350.00

300.00

250.00

200.00

150.00

100.00

50.00

0.00

7000

6100

5200

4300

3400

2500

1600

700

200

Apr-09 May Jun Jul Aug Sep Oct Nov Dec Jan-10 Feb Mar

195.50 304.35 282.95 288.40 305.30 317.75 289.15 322.05 342.75 340.60 365.75 377.25

3474 4449 4271 4636 4662 5084 4712 5033 5201 4882 4922 5249

• Sharetransferswereprocessedandsharecertificatesdespatchedwithinonemonthfromlodgementinaccordancewiththestock

exchange listing agreement.

• Dematerialisationrequestshavebeenconfirmedwithin21daysfromthedateofrequest.

• Investor Relation Services - Shares continue to enjoy the ISO 9001:2000 Certification by Bureau Veritas Certification (India) Private

Limited.

• M/sCameoCorporateServicesLtd.,RegistrarsandShareTransferAgentsoftheCompanyhaveattendedtothesharetransferformalities

regularly. The Registrar and Share Transfer Agents can be contacted by the investors at the following address:

M/s Cameo Corporate Services Ltd.

‘Subramanian Building’,

No 1 Club House Road, Chennai 600 002

Ph: 044 2846 0390 Fax: 044 2846 0129

Email: [email protected]

Contact Persons: Mr. R. D. Ramasamy, Director

Mr. D. Narasimhan, Senior Executive (Shares)


SHAREHOLDING PATTERN AS ON 31.03.2010

For your queries / grievances / complaints, please contact:

Sri P. Viswanathan

Deputy Secretary & Compliance Officer


21 Patullos Road, Chennai 600 002

Phone : 044-28558207

Fax : 044-28550290

E mail : [email protected]

T. T. Srinivasaraghavan

Managing Director

Public 43.53%

Banks, Financial Institutions & Insurance Companies

5.19%FIIs and NRIs 3.87%

Promoters 41.40%

Mutual Funds 6.01%

DISTRIBUTION OF SHAREHOLDING AS ON 31ST MARCH 2010

No. of Equity Shares Held Total Shareholders Total Shares Total % to Capital

Upto 250 8,970 7,93,965 1.43%

251 to 500 1,857 7,20,315 1.30%

501 to 1000 1,303 10,08,115 1.81%

1001 to 5000 1,719 39,66,738 7.14%

5001 to 10000 273 19,84,524 3.57%

10001 to 50000 340 78,18,640 14.07%

50001 to 100000 86 60,07,991 10.82%

100001 and above 104 3,32,51,642 59.86%

Total 14,652 5,55,51,930 100.00%

Total shares held in dematerialised form 56.40%

Public shareholding in dematerialised form 78.80%


66

Auditor’s Certificate on Corporate Governance

We have examined the compliance of the conditions of corporate governance by Sundaram Finance

Limited, Chennai for the year ended on 31st March, 2010, as stipulated in clause 49 of the Listing

Agreement entered into by the company with the stock exchange.

The compliance of the conditions of corporate governance is the responsibility of the management.

Our examination was limited to a review of the procedures and implementation thereof, adopted by

the company for ensuring the compliance with the conditions of Corporate Governance. It is neither

an audit nor an expression of opinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, we

certify that the company has complied with the conditions of Corporate Governance as stipulated in

clause 49 of the above mentioned Listing Agreement.

We state that such compliance is neither an assurance as to the future viability of the company nor the

efficiency or effectiveness with which the management has conducted the affairs of the company.




L.RAVI SANKAR




Consolidated

Financial

Statements


68

Consolidated Balance Sheet as at 31st March, 2010




(Rs. in Lakhs)

Schedule 31.03.2010 31.03.2009

I SOURCES OF FUNDS

1. Shareholders’ Funds

a) Capital 1 55,55.19 55,55.19

b) Stock Option Outstanding Account 2 23.28 –

c) Reserves and Surplus 3 1416,57.04 1472,35.51 1212,49.78 1268,04.97

2. Minority Interest 150,58.26 125,69.52

3. Loan Funds

a) Secured Loans 4 7063,82.32 5318,21.95

b) Unsecured Loans 5 3390,17.33 10453,99.65 2666,69.36 7984,91.31

Total 12076,93.42 9378,65.80

II APPLICATION OF FUNDS

1. Fixed Assets 6

a) Gross Block 551,81.12 560,67.57

b) Less: Depreciation 275,15.99 336,18.24

c) Net Book Value 276,65.13 224,49.33

d) Add: Lease Adjustment Account (1,96.82) (3,64.72)

e) Net Block 274,68.31 220,84.61

2. Investments 7 999,48.06 974,73.87

3. Deferred Tax Asset (Net) 8

Deferred Tax Asset 70,12.63 65,17.14

Less: Deferred Tax Liability 12,75.77 57,36.86 13,27.72 51,89.42

4. Current Assets, Loans and Advances

a) Current Assets 9 1834,52.27 870,79.98

b) Loans and Advances 10 10176,64.35 8299,05.05

(A) 12011,16.62 9169,85.03

Less: Current Liabilities and Provisions

a) Current Liabilities 11 1133,00.01 955,42.11

b) Provisions 12 132,76.42 83,25.02

(B) 1265,76.43 1038,67.13

Net Current Assets (A-B) 10745,40.19 8131,17.90

Total 12076,93.42 9378,65.80

Notes to the accounts 19



69

(Rs. in Lakhs) Schedule 2009-10 2008-09INCOMEIncome from Operations 13 1990,46.67 1742,60.49Profit on Sale of Shares 25,38.90 –Other Income 14 19,51.01 16,30.02 TOTAL (A) 2035,36.58 1758,90.51EXPENDITUREFinancial Expenses 15 795,76.78 789,20.66Insurance claims incurred (net) 254,02.67 205,76.48Establishment Expenses 16 208,00.79 179,15.99Administrative and Other Expenses 17 237,28.53 219,80.09General Provision on Standard Assets 32,30.50 24.22Provisions and Write Off 18 58,53.96 48,73.33Depreciation 55,35.30 46,98.11 TOTAL (B) 1641,28.53 1489,88.88 Profit before Tax (A) - (B) 394,08.05 269,01.63Taxation– Current (Including Wealth Tax) 131,20.48 100,26.85– Deferred (5,47.45) (11,20.30)– Fringe Benefit Tax 5.76 125,78.79 2,57.09 91,63.64Net Profit (before adjustment for minority interest) 268,29.26 177,37.99Less: Minority Interest 21,04.92 19,00.85 247,24.34 158,37.14Add: Share of Profit in Associates 26,37.95 9,51.47 Profit after Tax 273,62.29 167,88.61Provision for Income tax relating to earlier year (1,45.71) – Profit after Tax and Prior Period Items 275,08.00 167,88.61Add: Balance brought forward from previous year 128,06.66 126,27.72Change in value of holdings in (58.79) 1.21 Associates / Subsidiaries / Joint VenturesTransfer from Special Reserve 76,00.00 –Amount available for Appropriation 478,55.87 294,17.54APPROPRIATIONSDividend– Interim 33,33.12 22,22.08– Final (proposed) 22,22.07 13,88.80– Dividend Distribution tax 9,63.78 6,13.66Special Reserve 2,78.05 4,69.04Statutory Reserve 45,40.00 30,20.00General Reserve 179,93.32 88,97.30Surplus - Balance carried to Balance Sheet 185,25.53 128,06.66 478,55.87 294,17.54Notes to the Accounts 19Earnings per Equity Share (Refer Note 2.7 Schedule 19)Number of Shares considered 5,55,51,930 5,55,51,930(Face Value Rs.10/- per share)Basic and Diluted earnings per share (in Rupees) 49.26 30.22

Consolidated Profit and Loss Account for the Year Ended 31st March, 2010





70

SCHEDULES(Rs. in Lakhs)

31.03.2010 31.03.2009

1 Share Capital

Authorised Capital

10,00,00,000 Equity Shares of Rs.10/- each 100,00.00 100,00.00

Issued, Subscribed and fully paid-up

5,55,51,930 Equity Shares of Rs.10/- each 55,55.19 55,55.19 (includes 5,09,75,545 Equity Shares allotted as fully paid-up by way of bonus shares by Capitalisation of Reserves and 37,75,965 Equity Shares of Rs.10/- each allotted for consideration other than cash pursuant to a Scheme of Amalgamation)

2 Stock Option Outstanding Account 27.94 – Less: Deferred Employee Compensation Cost 4.66 23.28 – –

3 Reserves and Surplus

Capital Reserve

Per Last Balance Sheet 23,05.36 24,19.54

(Less)/Add: Changes in the value of holding in

Subsidiaries / Associates / Joint Ventures (5,22.98) 17,82.38 (1,14.18) 23,05.36

Securities Premium Account


Less: Issue of bonus shares – 19,52.77 15,04.97 19,52.77

General Reserve


Less: Issue of bonus shares – 12,72.62

Add: Transfer from Profit and Loss account 179,93.32 877,36.96 88,97.30 697,43.64

Statutory Reserve

Per last Balance Sheet 258,35.50 228,15.50


Special Reserve


Less: Transfer to Profit and Loss account 76,00.00 –


Surplus - Balance in Profit and Loss account 185,25.53 128,06.66

1416,57.04 1212,49.78



71

(Rs. in Lakhs)

31.03.2010 31.03.2009

4 Secured Loans

Non - Convertible Debentures 3316,85.04 2429,08.86

From Scheduled Banks 3744,88.95 2778,71.42

From International Finance Corporation 2,08.33 110,41.67

7063,82.32 5318,21.95

5 Unsecured loans

Fixed deposits

From Public 1573,47.66 1291,61.02

From Directors 7,36.43 1580,84.09 7,24.96 1298,85.98

Non - Convertible Debentures 335,00.00 503,00.00

Subordinated Non - Convertible Debentures 395,00.00 100,00.00

Debenture application money – 75,00.00

Short Term Loans and advances

From Scheduled Banks 306,61.39 36,36.41

Others 9,74.00 1,50.00

Commercial Paper 762,97.85 651,96.97

3390,17.33 2666,69.36

SCHEDULES


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73

(Rs. in Lakhs)

31.03.2010 31.03.2009

7 INVESTMENTS Long Term - At cost

A. In Government / Trust Securities Quoted 270,58.62 196,95.30

Unquoted 15,41.60 27,40.82

B. In Equity Shares

Quoted 36,81.73 18,40.44

Unquoted - Associates * 140,76.70 120,13.21

Unquoted - Others 7,63.15 3,45.45

C. In Preference Shares 6,00.00 6,00.00

D. In Bonds / Debentures Quoted 213,67.18 142,83.82

Unquoted 50.00 60.00

E. Others 4,64.21 5,33.43

Current Investments

A. In Government / Trust Securities Quoted 27,92.51 47,58.91

Unquoted 220,57.44 300,76.57

B. In Bonds / Debentures 45,02.71 84,92.17

C. Others Unquoted 9,92.21 20,33.75

Total 999,48.06 974,73.87

* Carrying amount of Associates include Capital Reserve on acquisition of shares Rs.39.59 lakhs

(31.03.2009- Rs.49.31 lakhs)

8 Deferred Tax Asset (Net) Deferred Tax Assets Provision for Standard Assets, 47,78.58 37,74.46

Non-performing Assets, etc.

Income deferment on Non-performing Assets 3,35.44 5,59.33

Net Asset on reserve for unexpired risk 4,67.90 5,15.55

Depreciation 9,38.34 11,29.96

Others 4,92.37 5,37.84

70,12.63 65,17.14

Less: Deferred Tax Liabilities Hire Purchase Income 5,68.38 5,76.57

Amortisation of Brokerage 6,30.72 6,52.77

Others 76.67 12,75.77 98.38 13,27.72

57,36.86 51,89.42

SCHEDULES


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31.03.2010 31.03.2009

9 Current Assets

a) Stock-on-hire and bills purchased

Net Investment in Stock-on-hire 217,61.96 281,78.48

Repossessed assets 10,76.35 13,42.01

Debtors on Securitisation 19.23 75.88

Trade bills purchased (unsecured, considered good)

Outstanding for a period exceeding six months – 1,89.00

Others 5,97.35 5,97.35 19,52.95 21,41.95

Net Investment in lease 44,75.85 44,33.56

279,30.74 361,71.88

Inventories 13.14 13.61

Sundry Debtors 7,09.93 7,67.42

b) Interest accrued on investments 4,63.88 3,16.84

c) Cash and bank balances

Current Accounts 34,61.49 63,42.98

Unpaid dividend account 59.27 98.11

Deposit accounts 1479,53.28 405,43.16

Cash on hand 18,27.97 18,06.04

Stamps and Stamp Papers on hand 58.16 1533,60.17 45.53 488,35.82

d) SFL Shares Trust 5,94.30 5,94.30

e) SFL Employees Welfare Trust 3,80.11 3,80.11

1834,52.27 870,79.98



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31.03.2010 31.03.2009

10 Loans and Advances

Unsecured unless otherwise stated :

Considered good :

– Secured Loans 9585,24.80 7784,97.82

– Unsecured Loans 30,99.05 16,38.87

Advance Income Tax and Tax Deducted at Source 98,89.89 84,35.64 (Net of Provision for Taxation)

Advances and deposits recoverable in cash or kind or for value to be received 74,73.48 128,88.57

Advance for purchase of assets

– Business Assets 129,32.96 75,40.11

– Others 30,72.86 31,99.53

Income receivable 226,71.31 177,04.51

10176,64.35 8299,05.05

11 Current Liabilities*

Sundry Creditors

– For expenses 339,80.34 235,22.95

– For other finance 272,30.94 244,21.08

– For Unexpired Insurance Risk 204,13.44 184,30.52

Unpaid dividend 59.27 98.11

Interest accrued but not due 316,16.02 290,69.45

1133,00.01 955,42.11

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund

12 Provisions

Non-performing assets 69,14.27 62,86.95

Standard Assets 33,94.72 1,64.22

Investments 2,95.58 1,59.43

Dividend 22,22.08 13,88.80

Dividend Distribution Tax and Surcharge 4,49.77 3,25.62

132,76.42 83,25.02


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13 Income from Operations Hire Purchase / Hypothecation Loans (net) 997,80.11 934,91.27 (tax deducted at source Rs.174.18 lakhs) Insurance Premium Earned (net) 356,06.42 297,75.26 Interest on Loans (tax deducted at source Rs.178.72 lakhs) 211,47.31 195,72.72 Lease (net)(tax deducted at source Rs.125.32 lakhs) 55,97.03 38,78.33 Investments (tax deducted at source Rs.154.35 lakhs) 125,26.45 89,84.46 Investment Management and Advisory Fee 109,87.38 85,25.56 (tax deducted at source Rs.708.01 lakhs) Services (tax deducted at source Rs.538.28 lakhs) 81,93.81 53,44.35 Profit on Securitisation / Selldown of Receivables 30,52.79 31,58.76 Recovery of Bad debts and Recovery of Loss on Sale of assets 9,94.90 6,37.94 Loan Processing and other fees 8,08.00 5,60.44 Bills Purchased 1,84.97 2,00.15 Profit on Sale of Leased Assets 94.63 95.32 Sale of Products 72.87 35.93 1990,46.67 1742,60.4914 Other Income Interest receipts (tax deducted at source Rs.0.85 lakhs) 6,53.57 1,58.46 Dividend 6,06.41 6,39.81 Rent receipts (tax deducted at source Rs.157.04 lakhs) 2,25.16 2,79.90 Profit on sale of assets 34.14 35.27 Miscellaneous Income 4,31.73 5,16.58 19,51.01 16,30.0215 Financial Expenses Interest – Fixed loans 362,28.74 359,30.46 – Debentures 356,48.11 322,11.52 – Others 1,12.05 20,93.97 Other financial expenses 75,87.88 86,84.71 795,76.78 789,20.6616 Establishment Expenses Salaries, allowances, commission and bonus 188,46.27 162,97.83 Company’s contribution to Provident Fund, Gratuity, 11,11.72 10,63.73 Superannuation and Employees’ State Insurance schemes Staff welfare expenses 8,42.80 5,54.43 208,00.79 179,15.9917 Administrative and Other Expenses Rent 19,29.81 15,24.14 Rates and taxes 4,71.08 4,64.57 Communication expenses 13,13.63 13,71.89 Electricity expenses 6,33.63 5,70.63 Travelling and conveyance (net) 14,69.94 14,65.63 Advertisement charges 17,46.49 9,85.85 Marketing and related expenses 46,62.04 52,01.77 Outsourcing Cost 58,90.44 51,59.96 Directors’ sitting fee 33.44 28.69 Insurance 2,29.25 2,36.09 Repairs – Buildings 1,64.76 1,36.70 – Others 21,18.28 17,32.95 Donations 3,03.60 2,22.30 Miscellaneous expenses 27,62.14 28,78.92 237,28.53 219,80.0918 Provisions and Write off Bad Debts 36,95.60 23,62.38 Loss on Assets sold/written off 13,76.02 8,38.83 Provision against non-performing assets (net) 6,01.13 14,53.84 Loss on sale of investments 4.24 52.81 Provision against Investments 1,76.97 1,65.47 58,53.96 48,73.33


2009-10 2008-09



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19 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS1.1 SIGNIFICANT ACCOUNTING POLICIES:

1.1.1 The Parent Company, Sundaram Finance Limited follows the directions prescribed by the Reserve Bank of India for Non-Banking Financial Companies, while the Subsidiary, Sundaram BNP Paribas Home Finance Limited and Joint Venture, Royal Sundaram Alliance Insurance Company Limited follow the directions prescribed by the National Housing Bank for Housing Finance Companies and the Insurance Regulatory and Development Authority respectively.

The financial statements of the Associate, The Dunes Oman LLC (FZC) have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

The preparation of the financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported amounts of revenues and expenses during the year and disclosure of contingent liabilities as at that date. The estimates and assumptions used in these financial statements are based upon the management’s evaluation of the relevant facts and circumstances as of the date of the financial statements.

1.1.2 Income Recognition:

a) Income from Hypothecation loan transactions, Hire Purchase and Housing Finance loan transactions is accounted on the basis of the Internal Rate of Return method.

b) Lease income is accounted as per the terms of the lease agreements for contracts entered into upto 31st March 2001. Income from leases entered into on or after 1st April, 2001 is accounted as per the Accounting Standard – AS 19 – Leases.

c) Income from Services is recognised on accrual basis.

d) Premium from Insurance business is recognised as income over the contract period or period of risk, as appropriate, after adjusting for unearned premium (unexpired risk) and premium deficiency, if any.

e) Trusteeship fee, Investment management and advisory fee are accounted on accrual basis.

f) Sales of Products are recorded when significant risks and rewards of ownership of products are passed on to the customers. Sales are stated at contractual realisable values, net of value added tax and inclusive of resale sales tax and trade discounts and returns if any.

Revenues from software development, which are generally time bound fixed price are recognised over the life of the contract using the proportionate completion method, with contract cost determining the degree of completion.

Revenue from other services is recognised as income on completion.

1.1.3 Financial Instruments:

Financial instruments such as commercial paper, zero coupon non convertible debentures etc., issued at a discount to the face value are accounted at their carrying cost, comprising issue price and accrued finance cost.

1.1.4 Fixed Assets and Depreciation / Amortisation:

Fixed assets are stated at historical cost less accumulated depreciation.

Depreciation on assets is provided on the Written Down Value Method at rates prescribed in Schedule XIV to the Companies Act, 1956. Assets costing Rs. 5000 or less acquired during the year are fully depreciated.

Cost of assets given on lease is amortised during the lease period for all leased assets acquired prior to 01.04.2001, as recommended in the “Guidance Note on Accounting for Leases (Revised)”. Lease Equalisation Account, which represents the excess/shortfall of annual lease charge when compared with statutory depreciation, is recognised. The Value of assets on Finance Lease is further adjusted for balance in Lease Adjustment Account.

Cost of assets taken on lease on or after 01st April, 2001 is amortised over the lease tenure as per the Accounting Standard – AS 19 – Leases, based on the capital recovery method.

SCHEDULES


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1.1.5 Valuation of Investments:

Long-term investments are stated at cost and provision for diminution in value, other than temporary, has been considered wherever necessary.

Current investments are valued at lower of cost and market value / net asset value.

1.1.6 Foreign Currency Transactions:

Transactions in foreign currencies are accounted at the prevailing rates of exchange on the date(s) of the transaction.

Monetary items denominated in foreign currencies are restated at the prevailing rates of exchange at the Balance Sheet date. Gain or loss arising out of fluctuations in exchange rates are accounted for in the Profit and Loss Account.

Exchange differences on forward exchange contracts, entered into for hedging foreign exchange fluctuation risk in respect of asset/liability are recognised in the Profit and Loss Account in the reporting period in which the exchange rate changes. Premium on forward exchange contracts is expensed over the tenure of the contract.

Interest accrued on secured / unsecured foreign currency loans which are covered by forward contracts has been provided at the forward exchange contract rate and on loans not so covered at the exchange rate prevailing at the year-end.

1.1.7 Employee Benefits:

A) Short Term Employee Benefits:

Short Term Employee Benefits for services rendered by employees are recognized during the period when the services are rendered.

B) Post employment benefits:

Defined Contribution Plan

i) Provident Fund Contributions are made to the company’s Employees Provident Fund Trust in accordance with the fund rules. The

interest rate payable by the trust to the beneficiaries every year is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return from the investment of the trust and the notified interest rate.

The Company also contributes to a government administered Employees Pension Scheme under the Employees Provident Fund Act and to Employees’ State Insurance Schemes on behalf of its employees.

ii) Superannuation

The Company makes fixed contributions as a percentage on salary to the Superannuation Fund, which is administered

by trustees and managed by the Life Insurance Corporation of India (LIC). The above contributions are charged to the Profit and Loss Account. Defined Benefit Plan i) Gratuity The Company makes an annual contribution to a Gratuity Fund administered by trustees and managed by LIC and SBI

Life Insurance Company Limited (SBI Life). The Company accounts its liability based on an actuarial valuation, as at the balance sheet date, determined every year by LIC and SBI Life using the Projected Unit Credit method.

ii) Leave Encashment Liability on account of encashment of leave to employees is provided on the basis of an actuarial valuation.

The expenses and actuarial gain / loss on account of the above benefit plans are recognised in the profit and loss account on the basis of an actuarial valuation.

C) Other Long Term Employee Benefits:

The estimated liability in respect of other long term benefits like Employee Assured Bonus Scheme, reimbursement of medical expenses and entitlement of sick leave has been provided on the basis of actuarial valuation.

SCHEDULES17 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Contd.)



79

D) Employee Stock Options: The Company determines the compensation cost based on the intrinsic value method. The compensation cost is amortised

on a straight line basis over the vesting period. 1.1.8 Taxation: Current tax is provided on the taxable income for the year. Deferred tax liabilities arising from timing differences have been fully provided for. Deferred tax assets are recognised on

the consideration of prudence. 1.1.9 Intangible Assets: Items of Computer Software acquired/developed are recorded as intangible assets and their cost is amortised over their

expected useful life. 1.1.10 Impairment of Assets: The carrying amounts of assets are reviewed at each balance sheet date to ascertain impairment based on internal / external

factors. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of the net selling price of the assets and their value in use.

1.1.11 Provisions: Provisions are recognised when the Company has present legal or constructive obligations, as a result of past events, for

which it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation.

1.2 Basis of Presentation: The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting

and comply with the relevant provisions of the Companies Act, 1956.

1.3 Basis of Consolidation: a) The financial statements of the following subsidiary companies have been consolidated as per Accounting Standard –

AS 21 – Consolidated Financial Statements.

Name of the Subsidiary Country of Proportion of ownership Incorporation interest (%) Sundaram BNP Paribas Home Finance Limited India 50.10 Sundaram BNP Paribas Asset Management Company Limited India 50.10 Sundaram BNP Paribas Trustee Company Limited India 50.10 Sundaram Business Services Limited (SBSL) India 100.00 Sundaram Infotech Solutions Limited India 100.00 Sundaram Finance Distribution Limited India 100.00 LGF Services Limited India 100.00 Infreight Logistics Solutions Limited India 88.02 Professional Management Consultants Limited India 100.00 Sundaram BNP Paribas Fund Services Limited India 51.00

b) The Company has the following investments in Joint Venture for which the required treatment as per Accounting Standard –

AS 27 – Accounting for Interests in Joint Ventures, has been given in the Consolidated Financial Statements.

Name of the Joint Ventures Country of Proportion of ownership Incorporation interest (%)

Royal Sundaram Alliance Insurance Company Limited India 49.90 Gulf Outsourcing Services Limited @ India 40.00 BNP Paribas Sundaram Global Securities Operations Private Limited India 49.00

@ considered on the basis of unaudited financial statement.



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c) The Company has the following investments in Associates for which the required treatment as per Accounting Standard – AS 23 – Accounting for Investments in Associates, has been given in the Consolidated Financial Statements.

Name of the Associates Country of Proportion of ownership Incorporation interest (%)

Axles India Limited* India 38.81 Turbo Energy Limited* India 32.00 Transenergy Limited* India 42.31 Sundaram Dynacast Private Limited India 26.00 Sundaram Hydraulics Limited* India 49.00 The Dunes Oman LLC (FZC) Sultanate of Oman 42.86 * considered on the basis of financial statements / details.

d) The Consolidated Financial Statements have been prepared on the following basis.

• The Financial Statements of the Parent Company and its Subsidiary Companies have been consolidated on a line-by-line basis, by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses.

• TheConsolidatedFinancialStatementshavebeenpreparedbyadoptingUniformAccountingPoliciesexceptforthefollowingCompanies:

– BNP Paribas Sundaram Global Securities Operations Private Limited depreciates Information Technology Software using straight-line method of depreciation.

– Royal Sundaram Alliance Insurance Company Limited depreciates Information Technology Software, vehicles improvements to leased premises and office equipments using straight-line method of depreciation.

• TheAssociate,SundaramDynacastPrivateLimited’sreportingdatewas31.12.2009andtheFinancialStatementsasonthat date have been considered for the purpose of preparation of Consolidated Financial Statements.

• TheFinancialStatementsoftheSubsidiary,SundaramBNPParibasFundServicesLimited,fortheperiod27thJune2008to 31st March 2010 have been considered for the purpose of preparation of Consolidated Financial Statements.

• TheFinancialStatementsoftheJointVenture, BNP Paribas Sundaram Global Securities Operations Private Limited, for the

period 25th September 2008 to 31st March 2010 have been considered for the purpose of preparation of Consolidated

Financial Statements.2. General

2.1 Change in Recognising Premium Income by Royal Sundaram Alliance Insurance Company Limited (RSAICL).

Premium Recognition:

The Company has changed the method of recognition of Premium on Long Term Health and Personal Accident policies in the current

Financial Year. The Premium income is recognised to the extent of one year premium in the year of inception of the policy and the

balance is recognised as Premium received in advance, for adjustment against future automatic renewals. Consequent to this change,

the effect in operating profit for the year is as under.

(Rs in Lakhs)

Decrease in operating profit of Miscellaneous Business 26.96

Increase in Current Liabilities - Premium Received in Advance 1564.68

2.2 During the year the Company acquired 13% stake in Professional Management Consultants Limited, consequent to which, the

Company’s share holding has increased from 87% to 100%.




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2.5 Segment Reporting (Rs. in Lakhs)

Business Segments Asset Financing Insurance Other Operations Eliminations Consolidated Total

Current Previous Current Previous Current Previous Current Previous Current Previous Year Year Year Year Year Year Year Year Year Year

REVENUE

Segment Revenue 1395,45.69 1268,42.90 401,10.49 334,48.86 193,90.49 139,68.73 – – – –

Inter segment sales 3,36.26 2,18.66 1,90.26 1,67.36 55,28.70 50,74.03 60,55.22 54,60.05 – –

Total Revenue 1398,81.95 1270,61.56 403,00.75 336,16.22 249,19.19 190,42.76 60,55.22 54,60.05 1990,46.67 1742,60.49

RESULT

Segment Result 320,91.09 255,86.02 16,82.19 4,65.52 35,76.56 13,86.71 7,29.68 6,97.79 380,79.52 281,36.04

Unallocated income – – – – – – – – 13,28.53 (12,34.41) (net of expense)

Profit before tax – – – – – – – – 394,08.05 269,01.63

Less: Income tax – – – – – – – – 125,78.79 91,63.64

Add: Share of Profit in – – – – – – – – 26,37.95 9,51.47 Associates

Less: Minority Interest – – – – – – – – 21,04.92 19,00.85

Profit after Tax – – – – – – – – 273,62.29 167,88.61

OTHER INFORMATION

Segment Assets 12549,63.42 9797,43.76 610,36.04 497,49.03 153,38.38 106,72.62 183,82.44 182,56.68 13129,55.40 10219,08.73

Unallocated Assets – – – – – – – – 213,14.45 198,24.20

Total Assets – – – – – – – – 13342,69.85 10417,32.93

Segment Liabilities 11184,41.84 8610,49.28 495,00.56 389,20.37 62,00.44 58,35.12 48,38.61 51,60.75 11693,04.23 9006,44.02

Unallocated Liabilities – – – – – – – – 26,71.85 17,14.42

Total Liabilities – – – – – – – – 11719,76.08 9023,58.44

Capital Expenditure 83,32.29 75,44.73 5,10.53 4,85.24 31,51.95 4,69.45 – – 119,94.77 84,99.42

Depreciation 43,91.39 35,90.64 4,97.94 5,24.72 6,45.97 5,82.75 – – 55,35.30 46,98.11

Non-cash expenses 89,56.38 48,76.77 3.32 3.33 1,04.13 2.46 – – 90,63.83 48,82.56 other than depreciation

2.3 During the year, Royal Sundaram Alliance Insurance Company Limited has, on the basis of a technical evaluation, revised the useful

life of Office Equipment and has accordingly changed the method of depreciation from the written down value method to the straight

line method. Consequently, Office Equipment are amortised equally over a period of five years and this has resulted in a higher

charge of depreciation by Rs.183.40 lakhs to the Profit and Loss Account.

2.4 During the year, Professional Management Consultants Limited has changed the method of depreciation from the Straight Line method to the Written Down Value method. Consequently, depreciation for the year and the loss for the year are higher by Rs.2.17 lakhs.


82


2.6 Related Parties Disclosures:

2.6.1 Related party disclosures, as stipulated by Accounting Standard – AS 18 – Related Party Disclosures, are given below:

Related Parties:

Associates:

Axles India Ltd.

Turbo Energy Ltd.

Transenergy Ltd.

Sundaram Dynacast Pvt. Ltd.

Sundaram BNP Paribas Mutual Fund

Sundaram Medical Foundation

Sundaram Hydraulics Ltd.

The Dunes Oman LLC (FZC)

Key Management Personnel:

Mr. T. T. Srinivasaraghavan, Managing Director

Mr. Srinivas Acharya, Deputy Managing Director

Relatives of Key Management Personnel:

Mr. T. T. Srinivasaraghavan Mr. T. T. Rangaswamy Father

Mrs. Vimala Rangaswamy Mother

Mrs. Bagyam Raghavan Wife

Miss. Anjana Raghavan Daughter

Master T. T. Venkatraghavan Son

Mr. T. T.Narendran Brother

Mr. Srinivas Acharya Mrs. Revathi Srinivas Wife

Mr. Vishal Srinivas Son

Mrs. Radha Venkatesh Sister



83

(Rs. in Lakhs)

2.6.2 RELATED PARTY TRANSACTIONS FOR THE YEAR ENDED 31ST MARCH 2010

The nature and volume of transactions of the Company during the year, with the above related parties are as follows.

Nature of Transactions Associates Key Relatives of Key Total Previous Year Management Management April 09 – 2008-09 Personnel Personnel March 10

INCOME Income from Services rendered Sundaram BNP Paribas Mutual Fund 2,25.09 2,25.09 1,75.32 Turbo Energy Ltd. 52.00 52.00 55.46 Others 0.32 Total 2,77.09 2,77.09 2,31.10 Dividend Turbo Energy Ltd. 5,76.00 5,76.00 1,34.40 Others 11.70 11.70 14.04 Total 5,87.70 5,87.70 1,48.44 Rent Receipts Turbo Energy Ltd. 14.05 14.05 14.05 Total 14.05 14.05 14.05Interest Axles India Ltd. 49.64 1.13 50.77 1.23 Total 49.64 1.13 50.77 1.23 Income from Lease Turbo Energy Ltd. 70.72 70.72 52.47 Others 9.03 9.03 5.32 Total 79.75 79.75 57.79 Income from Bill Discounting Axles India Ltd. 1,12.86 1,12.86 46.52 Trusteeship Fees & Investment Management Advisory Fees Sundaram BNP Paribas Mutual Fund 102,80.46 102,80.46 78,17.22 Other Income 0.05 0.05 0.15

EXPENSE Scheme Expenses Sundaram BNP Paribas Mutual Fund 35.00 35.00 30.00Interest Sundaram BNP Paribas Mutual Fund 44.73 44.73 Others 9.14 16.90 26.04 11.37 Total 44.73 9.14 16.90 70.77 11.37 Remuneration 2,58.14 2,58.14 1,98.62 Dividend 8.99 40.12 49.11 66.26 Donation Sundaram Medical Foundation 2,00.00 2,00.00 1,00.00Other Expenses 2.50 2.50 2.65



84

Nature of Transactions Associates Key Relatives of Key 31.03.2010 31.03.2009 Management Management Personnel Personnel

(Rs. in Lakhs)

ASSETS Investment in Equity Shares The Dunes Oman LLC (FZC) 4,32.19 4,32.19 Others 7,46.71 Total 4,32.19 4,32.19 7,46.71 Intercorporate Loans disbursed to: Axles India Ltd. 5,00.00 5,00.00 Total 5,00.00 5,00.00 Investment in Trust Securities Sundaram BNP Paribas Mutual Fund 1282,22.94 1282,22.94 571,09.91 Disinvestment in Trust Securities Sundaram BNP Paribas Mutual Fund 1306,82.48 1306,82.48 552,37.41 Assets-Outstanding Balances as on 31.03.2010Preference Shares Holdings Axles India Ltd. 6,00.00 6,00.00 6,00.00 Equity Holdings Axles India Ltd. 10,15.70 10,15.70 10,15.70 Sundaram Hydraulics Ltd. 7,35.00 7,35.00 The Dunes Oman LLC (FZC) 22,64.33 22,64.33 Others 3,35.41 3,35.41 3,35.41 Total 4350.44 43,50.44 13,51.11 Intercorporate Loans Axles India Ltd. 5,00.00 500.00 Total 5,00.00 5,00.00 Trust Securities Sundaram BNP Paribas Mutual Fund 38,38.38 38,38.38 59,47.63 Investment Management Fee receivable 6,72.80 6,72.80 2,72.96 Future Lease Receivables Turbo Energy Ltd. 1,56.46 1,56.46 1,29.61 Axles India Ltd. 63.20 63.20 29.53 Others 3.39 3.39 4.57 Total 223.05 2,23.05 1,63.71 Bills purchased 14,19.99 Other Assets 24.30 18.45 42.75 28.47

LIABILITIES Issue of Bonus Shares 28.80 Liabilities-Outstanding Balances as on 31.03.2010 Equity Holdings 10.57 47.15 57.72 57.88 Deposits 49.72 1,62.14 2,11.86 2,20.33 Interest on Deposits 9.43 14.19 23.62 9.99 Other Liabilities 0.17 0.17 0.13

No amount has been written off/written back during the year




85


2.7 Earnings per Share (Basic and diluted) 2009-10 2008-09

A. Profit for the year after taxation (Rs. in lakhs) 273,62.29 167,88.61

B. Number of equity shares 5,55,51,930 5,55,51,930

C. Basic and diluted earnings per share (in Rs.) 49.26 30.22

2.8 Contingent liabilities in respect of (Rs. in lakhs)

As at As at

31.03.2010 31.03.2009

a) Liability –

To Banks – On Cheques discounted 40,15.98 18,62.19

– On Counter Guarantee 50.37 77.20

– To Sales Tax Authorities 10.32 30.97

– On Letter of Credit 9,12.49 –

b) Claims against the Company not acknowledged as debts 105,43.43 21,77.02

2.9 Previous Year’s figures have been regrouped / reclassified wherever necessary to conform to current year’s classification.

Signatures to Schedules 1 to 19





86

(Rs. in Lakhs) 2009-10 2008-09CASH FLOW FROM OPERATING ACTIVITIESNet Profit 275,08.00 167,88.61Add: Lease Equalisation Account (91.85) 55.77Provision for Taxation (Including Wealth Tax ) 125,78.79 91,63.64Provision for tax relating to earlier years (1,45.71) – 398,49.23 260,08.02Add: Financial Expenses 795,76.78 1194,26.01 789,20.66 1049,28.68 Dividend received from Associates / Subsidiaries 16,11.32 10,06.19 Depreciation 56,33.95 48,58.22 Profit attributable to Minority Interests 21,04.92 19,00.85 Provision against Investments 1,76.97 1,65.47 Provision against Non - Performing assets 6,01.13 14,53.84 General Provisions on Standard Assets 32,30.50 24.22 Employee Stock Option Compensation Expenses 23.28 – (Profit) loss on sale of assets 36.75 (53.14)(Profit) loss on sale of Investments (70,66.52) (18,26.65)Interest / Dividend Received (63,22.23) (51,26.18)Effect of foreign exchange rate changes 14.21 5.18 Less: Share of Profits from Associates (26,37.95) (9,51.47)OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 1168,32.34 1063,85.21 (Increase) Decrease in net stock on hire 67,08.38 (14,54.42)(Increase) Decrease in leased assets - net of sales (450,27.29) (211,36.36) (Increase) Decrease in Trade Bills purchased 15,44.60 (11,31.50) (Increase) Decrease in Net Investment in Lease 7.96 8,03.53 (Increase) Decrease in Loans and Advances (1427,25.13) (71,76.46) (Increase) Decrease in Inventories 0.47 (0.47) (Increase) Decrease in Other Receivables (36,07.50) (31,97.28) (Increase) Decrease in Bank Deposits (net) (1089,04.00) (120,46.80) (Increase) Decrease in SLR Investments - net of sales (21,25.75) (26,45.09) Increase (Decrease) in Current Liabilities 146,36.79 (2794,91.47) (11,49.77) (491,34.62)Cash generated from Operations (1626,59.13) 572,50.59 Financial Expenses (780,89.23) (715,51.50) Direct Taxes Paid (120,98.22) (901,87.45) (85,64.22) (801,15.72)NET CASH FROM OPERATING ACTIVITIES (A) (2528,46.58) (228,65.13)CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (49,64.90) (26,58.52)Sale of Fixed Assets 1,17.73 1,44.20 Purchase of Investments (15989,88.90) (5809,17.76)Sale of Investments 16075,52.27 5599,64.79 Interest Received 39,54.11 40,41.71 Dividend Received 13,33.52 9,65.66 NET CASH FROM INVESTING ACTIVITIES (B) 90,03.83 (184,59.92)CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of debentures 3470,76.18 4183,07.86 Debentures Redeemed (2686,00.00) (4151,00.00)Increase (Decrease) in long term borrowings 1015,45.46 (242,91.55)Increase (Decrease) in Fixed Deposits 281,98.11 376,74.99 Increase (Decrease) in short term loans and advances 388,96.83 377,55.10 Dividend paid (including Corporate Dividend Tax) (66,10.07) (81,09.58)NET CASH FROM FINANCING ACTIVITIES (C) 2405,06.51 462,36.82 Effect of foreign exchange rate changes (D) (14.21) (5.18)NET INCREASE IN CASH AND CASH EQUIVALENTS (A)+(B)+(C)+(D) (33,50.45) 49,06.59 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 188,27.25 138,83.74 Add: Adjustment for change in holdings in subsidiaries/joint venture – 36.92 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 154,76.80 188,27.25 Current Account with Banks 35,20.76 64,41.09 Cash, Stamps and Stamp Papers on Hand 18,86.12 18,51.57 Short Term Deposit 100,69.92 105,34.59 Notes: 1. Cash and Cash equivalents includes balance in Unpaid Dividend account of Rs.59.27 lakhs (31.03.2009 Rs.98.11 lakhs) 2. Previous Year’s figures have been regrouped/reclassified wherever necessary to conform to current year’s classification

Consolidated Cash Flow Statement

As per our report of even date attached S. Viji S. Ram For Brahmayya & Co., Chairman S. NarayananChartered Accountants Srinivas Acharya L. Ravi Sankar T. T. Srinivasaraghavan T. R. SeshadriPartner Managing Director S. Ravindran S. PrasadChennai, S. Venkatesan Aroon Raman28th May, 2010 CFO & Secretary Directors



87

Auditors’ Report to the Board of Directors of Sundaram Finance Limited On the Consolidated Financial Statements

We have examined the attached consolidated balance sheet of

Sundaram Finance Limited, Chennai its subsidiaries and associate

companies as at 31st March, 2010, the Consolidated Profit and Loss

Account for the year ended on that date and the Consolidated Cash

Flow Statement for the year ended on that date annexed thereto

which we have signed under reference to this report. These financial

statements are the responsibility of the management of Sundaram

Finance Limited. Our responsibility is to express an opinion on

these financial statements, based on our audit.

We conducted our audit in accordance with generally accepted

auditing standards in India. These Standards require that we plan

and perform the audit to obtain reasonable assurance whether

the financial statements are prepared, in all material respects, in

accordance with an identified financial reporting framework and are

free of material misstatements. An audit includes, examining on a

test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as

well as evaluating the overall financial statements. We believe that

our audit provides a reasonable basis for our opinion.

The financial statements of two subsidiary companies, two joint

venture companies and one associate company reflecting total assets

of Rs.1402,48.98 lakhs as at 31st March, 2010, total revenue of

Rs.951,64.81 lakhs and net cash inflows amounting to Rs.12,39.90

lakhs for the year ended on that date, the financial statements of an

associate company reflecting total assets of Rs. 10,81.68 lakhs

as at 31st December, 2009 and total revenue of Rs. 16,45.29 lakhs

for the year ended on that date have been audited by other auditors,

whose reports have been furnished to us. We have relied upon these

reports for the purpose of the amounts included in respect of the

above companies in the Consolidated Financial Statements.

The financial statements of two associate companies and one joint

venture company reflecting total assets of Rs.219,13.83 lakhs as

at 31st March, 2010 and total revenue of Rs. 393,18.20 lakhs for

the year ended on that date are based on their unaudited financial

statements as on 31st March, 2010.

In respect of two associate companies the total assets of Rs.331,08.83

lakhs as at 31st March, 2010 and total revenue of Rs.551,34.18

lakhs for the year ended on that date are based on the unaudited

financial details.

We report that the Consolidated Financial Statements have been

prepared by the Company in accordance with the requirements of

Accounting Standard –

AS 21 – Consolidated Financial Statements

AS 23 – Accounting for Investments in Associates in Consolidated

Financial Statements.

AS 27 – Financial reporting of Interest in Joint Ventures

as prescribed in Section 211(3C) of the Companies Act, 1956 and on

the basis of the separate audited financial statements of Sundaram

Finance Limited and its subsidiaries, the audited / unaudited financial

statements of its associate and joint venture companies as mentioned

above, included in the Consolidated Financial Statements.

On the basis of the information and explanations given to us and on

the consideration of the separate audit reports of individual audited

financial statements of Sundaram Finance Limited, its subsidiaries

and the audited / unaudited financial statements of its associate and

joint venture companies, we are of the opinion that in conformity

with the accounting principles generally accepted in India,

a) the Consolidated Balance Sheet gives a true and fair view of the

Consolidated State of Affairs of Sundaram Finance Limited, its

subsidiaries, associate and joint venture companies as at 31st

March, 2010,

b) the Consolidated Profit and Loss Account gives a true and fair

view of the consolidated results of operations of Sundaram

Finance Limited, its subsidiaries, associate and joint venture

companies for the year ended 31st March, 2010 and

c) the Consolidated Cash Flow Statement gives a true and fair view

of the consolidated cash flows of Sundaram Finance Limited, its

subsidiaries and joint venture companies for the year ended

31st March, 2010.For BRAHMAYYA & CO., Chartered Accountants


L. RAVI SANKAR Place: Chennai Partner Date: 28th May, 2010 Membership No. 25929


88

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Jammu & Kashmir

57th annual report 2009-10 · 2010. 7. 29. · your directors have pleasure in presenting the 57th...

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